Employee empowerment has become an indispensable managerial strategy through which organizations can achieve a long lasting competitive edge. Keeping in view the significance of empowerment and that it has an impact on employee perception towards service quality and customer perceived service quality, this research was designed. The sector chosen for study what the banking sector of Pakistan. The research was based on a sample size of 400 out of 200 Which respondents were frontline employees working in different banks of Lahore and Pakistan specifically and the remaining 200 questionnaires were filled by customers getting the services from those frontline employees. Statistical measures like correlation and regression were used to analyze the data. The research showed that employee empowerment positively affects the service quality. The findings revealed that employee empowerment had a strong impact on the employee''s perception about service quality and a weak effect over the customer perceived service quality. The research provided evidence that organizations can use employee empowerment as a valuable tool for improving service quality.