The intention of this paper is to examine the applicability factors on the implementation of Performance Based Funding (PBF) mechanism in Malaysian public universities. Three applicability drivers examined in this study are consisting of government objectives, level of understanding and autonomy. Survey questionnaires were distributed to all Dean and Deputy Dean of the faculty of all 20 public universities in Malaysia. This study investigated the drivers of PBF mechanisms for Malaysian public universities. By filling the research gap, this study can serve and provide the Malaysian Government with valuable understanding with regard to the views of public universities on the implementation of PBF. This study also assessed the applicability of the implementation of PBF that may serve as a reference or guideline to the Federal Government in developing PBF and applying higher education funding policies. This study can also function as a reference guide to other nations, especially amongst developing nations considering PBF programs. The findings from the quantitative data showed that government objectives, level of understanding and autonomy have significant and positive relationships with PBF mechanism implementation. Consistent with previous studies, government objective has proven to have a significant relationship with the PBF mechanism implementation where it usually acts as a strategic planning by the government to align the institutional objectives with government objectives.