Women empowerment and poverty alleviation requires unprecedented efforts to serve the underprivileged segment of the society. Several interventions have been made across the world and provision of microfinance facilities is one of those kinds. Globally, microfinance has played a crucial role in cultivating the livelihoods of the underprivileged stratum of society. In Pakistan, the emergence of microfinance could be considered as a positive development towards resolving the issues of women empowerment and poverty alleviation as many players are entering into the market and the outreach of credit has increased manifold. The focus of this study is to lay emphasis on microfinance sector and to examine its challenges in eradicating poverty and empowering women. Though microfinance includes a broad range of services but this paper will specifically discuss the role of microcredit services and its impact.