The basic purpose of our research paper is to evaluate the impact of Capital Structure on the Firms Financial Performance and Shareholders Wealth in textile sector of Pakistan. We have conducted the regression analysis on our sample data of 155 textile firms for the year 2006 to 2011. We use the overall textile sector ROA ROE and EPS ratios as accounting measures to evaluate the impact of Capital Structure on Firms Financial Performance and Shareholders wealth. Our results shows that the capital structure positively impact the Firms Financial Performance and Shareholders Wealth.