Institutional repository is a network accessible database, with a set of services to capture, store, index, preserve and disseminates an institution's scholarly output in digital format. The main objective of the paper is to discuss the experiences in developing an institutional repository at faculty of medicine, university of Jaffna and suggestions to overcome the challenges. Further, to encourage the other universities in developing institutional repositories by emphasizing the benefits of an institutional repository in a university and also focuses on some key issues to be considered when developing a repository. The repository of university of Jaffna, faculty of medicine is functioning in the software D-Space with a dedicated server. Formulating collection policy, authority control of bibliographic details, checking the copyright policy and persuading the faculty members to deposit their publications were the major challenges focused in this study. More effort is needed to persuade researchers to deposit their publications. Librarians need to continue to educate them about the importance of institutional repository. Sharing experience in developing institutional repository would be useful to other universities.