Abstract. Deadlock is a highly unfavourable situation, the deadlock problem becomes further complicated if the underlying system is distributed. Deadlocks in distributed systems are similar to deadlocks in single processor systems, only worse. They are harder to avoid, prevent or even detect. They are hard to cure when tracked down because all relevant information is scattered over many machines.In deadlock situations the whole system or a part of it remains indefinitely blocked and cannot terminate its task. Therefore it is highly important to develop efficient control scheme to optimize the system performance while preventing deadlock situations.In this research paper, a new deadlock prevention algorithm have been offered with the emergence of grid computing. The main objective of paper is to prevent deadlock problem in Grid environment in order to preserve the data consistency and increase the throughput by maximizing the availability of resources and to ensure that all the resources available in the grid are effectively utilized.