The purpose of this article is to provide an assessment and analysis of public sector performance contracting as a performance management tool in Kenya. It aims to demonstrate that performance contracting remains a viable and important tool for improving public sector performance as a key element of the on-going public sector transformation strategy for achieving the country's long-term development goals. The work is based on a performance management assessment and an analysis of performance contracting and its implementation through practice and learning in the public sector in Kenya. Key challenges and benefits of the performance contracting process have been identified and the findings indicate that the use of performance contracting as a management tool to improve public sector performance has provided, and can continue to provide, significant benefits to Kenya.