Performance appraisal is an integral part of any organization as it helps organizations ensuring employees are working hard to contribute to achieving the organization’s mission and objectives. The objective of this study was to investigate the impact of performance appraisal system on job performance of employees of Bank of Ceylon in the Northern Province of Sri Lanka. The study was conducted with a sample of 173 employees who are working in Bank of Ceylon in the Northern Province of Sri Lanka. The study employed a survey method and questionnaires were used to collect data. The type of investigation was explanatory in nature and cross sectional according to time horizon. Pearson Product-Moment Correlation and regression analysis were used to test the hypotheses. There are many dimensions to measure the quality of performance appraisal system, however, the current study focused on four dimensions namely fairness of appraisal, appraisal satisfaction, relationship with peers and superiors and appraisal accuracy. The results of the study revealed that perceived quality of performance appraisal system has a positive impact on perceived degree of job performance. Multiple regression analysis revealed that fairness of appraisal and appraisal satisfaction have significant positive impact on job performance whereas relationship with peers and supervisors and appraisal accuracy do not significantly impact job performance. The finding of this study gives an insight to the banking sector to promote the performance of employees through quality of appraisal system.