The study investigated the performance of appraisal system and organizational performance in Nigerian Universities in South–East States. 106 respondents from 17 universities across the south–Eastern states were sampled. The study used descriptive statistics (Frequencies, mean, and percentages) to answer the three research questions posed for the study. The Spearman Rank Correlation Coefficient was used to test the three hypotheses that guided the study. The performance Appraisal system was measured with two scales, Ädministrative purposes and Developmental purposes. The specific objective of this research work is to investigate whether performance appraisal system affects organizational performance of Nigerian Universities in South East. Results from the analyses indicated that perceived systematic use of performance appraisal system of an institution is significantly and positively related to its organizational performance. The study also revealed that appraises perceived that PAS is not being used for recording their performance accurately. The research therefore recommends that future research should investigate this topic deeply as there is very limited research on PAS of Nigerian Universities. More so, further research should study the impact perceived purpose on employee satisfaction with PAS and relationship of PAS purposes with other individual and organizational outcomes.