The main purpose of this research study is to measure the efficiency and market competition of Pakistani commercial banks and also show the relationship between competition and efficiency of banks. This study is based on secondary data, the data were collected through the finical statements. As in the economic sector of Pakistan banks are playing leading role in the development of country because main function of bank is to accept deposit and lend money to others. The results of the present study revealed that when market is monopolistic the efficiency of banks occuring less but when monopoly increase (power reduce) the competition increase the efficiency of banks in Pakistan.