The objective of this study is to analyze the effects of foreign aid on economic growth of Pakistan. The time series data for the period 1980-2008 is used by applying OLS regression model and two diagnostic methods namely Breusch-Pagon and Durbin-Watson tests. Results depict that foreign aid is insignificantly related to the economic growth to Pakistan for short-run and long-run. By excluding the foreign direct investment, results are significant but still a negative relationship exists. This study will help to government organizations by recognizing about the impact of foreign aid on economic growth.