Dissertation (MSc Accounting and Finance)Asset and Liability Management (ALM) becomes an important and critical issue in financial institutions particularly in commercial banks. The uncertainty of returns expected from their assets, risks associated with those assets and the need of liquidity enforces banks to give more attention for their assets and liability composition. Therefore, this study sought to examine the effect of asset and liability management on profitability of commercial banks in Tanzania. Specific objectives of the study were: to assess the effect of capital adequacy, asset quality and liquidity on profitability of the commercial banks in Tanzania. The study adopted a cross sectional research design. The target population was commercial banks listed at Dar es Salaam stock exchange. Secondary data was utilized as the source of data for the study. The data was collected from six listed commercial bank’s audited financial statements covering the period of four years from 2016-2019. Quantitative data were analyzed using descriptive statistics, correlation and multiple linear regression models. The findings from correlation and multiple linear regression coefficients indicated that capital adequacy, asset quality and liquidity management as components of assets liability were statistically significant and positively related to profitability of commercial bank. Therefore, commercial Banks should comply with Bank of Tanzania (BOT) banking rules and regulations to avoid the increasing incidence of nonperforming loans and the regulatory authorities should regularly access the lending behavior on the banking industry. Therefore, the study concludes that capital adequacy, asset quality and liquidity affect profitability of commercial banks in Tanzania. The study recommends that bank embed effective asset and liability management policies to enhance profitability