Poverty is a threat to peace and results in denial of all human rights. Microfinance spread across the globe as a means to alleviate poverty in the early seventies, invented by Bangladeshi Economist Professor Muhammad Yunus. Despite its significant contribution to help the poor worldwide, the impact of microfinance in alleviating poverty is always in question. To evaluate this prevailing issue, this study explores the linkage between microfinance and poverty alleviation and also examines the impact of microfinance on poverty alleviation. Drawing on an empirical case study, this study examines how far microfinance institution plays important role in alleviating poverty in Bangladesh. Though there are some problems regarding its operation, based on our research findings, the study concludes that microfinance can make meaningful contribution to alleviate poverty for rural people. The study also suggests that this organization needs to look more seriously at the diversified needs of the poor people and target the extremely poor.