OBJECTIVES: To examine the psychological issues following acquired limb amputation and examine the significance of positive self-esteem in the psychological adjustment of amputation. METHODOLOGY: This case study was conducted in the surgical and orthopedic units of different government and private hospitals of Peshawar district. The study includes a sample of 100 acquired limb amputees,both adult males and females admitted in different hospitals of Peshawar. Patients with congenital limb loss or with preexisting psychological issues were excluded from the study. Psychological adjustment scale developed by Sabir (1999) and Self-Esteem scale developed by Rifai’s (1999) was used to determine the amputee’s level of psychological adjustment and self-esteem. RESULTS: Results revealed that amputation leads to number of psychological issues. It was found that males had lowered self-esteem and severe adjustment issues then females while young amputees exhibit greater signs of maladjustment as compared to older amputees. Regression analysis for selfesteem predicting psychological adjustment also displayed pronounced differences in the level of psychological adjustment due changing level of self-esteem. The model suggested a strong positive relation between self-esteem and psychological adjustment (r=0.880, B=0.867, t=18.37, p<.001) and 77.5% of the variance in the dependent variable (psychological adjustment) was caused by predictor variable i.e. self-esteem (R2=0.775, F (98)=337.6, p<.001). CONCLUSION: Amputation badly disturbs the psychological state of an amputee and an amputee’s self-esteem is an important coping tool and has a direct relation with better psychological adjustment to limb loss.