This study investigated on the impact of microfinance through the concept of Self Help Groups on women empowerment in Puducherry (Tamil Nadu), India. The first part of the research consists of a literature study comparing the existing evidence on the effects of microfinance on women empowerment. The second part, a field study, was performed by comparing two groups of microloan receivers from Indian NGO Prime Trust, consisting of 66 women in total. The first group was at the time of measurement in the process of repaying their first loan, while the second group was in the process of repaying their second loan and had already completed their first. The women were compared on their empowerment scores with a questionnaire, measured with eight indicators created by Hashemi, et al. (1996). The research concluded that microfinance has a significant positive influence on women empowerment, in particular on women''s economic security, their involvement in major decisions and their relative freedom from domination by the family.