The main purpose of the study was to examine the effect of performance management system practice on organizational performance in the Addis Ababa city administration Health bureau the study deployed both primary and secondary data. A self-administered structured questionnaire and open ended interview was used as instrument of data collection. All employees of the bureau were considered as the population of study and 134 employees were sampled using systematic random sampling technique and 13emloyees for interviews used purposive sampling technique. Descriptive and inferential analysis were deployed and correlation coefficient was used to investigate the relationship between all variables of the study while regression analysis was used to see the effect of each explanatory variable on the dependent variable. The result revealed that the performance management practice of the case organization was not adequate to support organizational performance as required and consequently the organizational performance was also average. The result confirmed that there was a significant positive relationship between Independent variables and dependent variable. The study also showed that performance planning, performance appraisal; performance feedback and performance training have significant positive effect on organizational performance. The study recommends that the organization should to improve the implementation and practice based on the overall findings for possible action which will help further improvement based on the researcher view of these four phases of the PMS.rnKey Words: Performance Management system, performance planning, performance appraisal, performance feedback, performance training, performance management Practice and organizational performance.