Quality assurance in higher education has become an endeavor of global proportions. With the increasing necessity of quality assurance system, the efforts have been initiated within the higher education sector in Mongolia to seek a feasible internal quality assurance system that is in line with the international standards. The main objective of this article is to identify the problems encountered Mongolian higher education system specifically to the implementation of internal quality assurance in HEIs and explore factors that are influential to the implementation of internal quality assurance system of Mongolia. Thus, this article is expected to give recommendations at institutional level by pinpointing the facts that should be taken into account in developing and implementing a workable and effective internal quality assurance system for Mongolian higher education institutions. This article reviewed literatures on the quality assurance systems in higher education area, and determined the current situation and challenges encountered in quality assurance of Mongolian higher education institutions. The findings of the article indicate that the four main issues — the factors influential to the establishment of effective IQA system, quality assurance structure, lack of understanding towards IQA activities and implementation as the view of preparing only for self-evaluation report, and the lack of transparent information system. The article finds that the participation of both external and internal stakeholders in quality assurance process and activities is the key to the development and implementation of an effective internal quality assurance system.