The purpose of this paper is to critically evaluate the increasingly important topic of women empowerment which plays a determining role in the economic development of any nation. The paper is designed to study the empowerment of women through microfinance in the context of a developing nation like Pakistan. Pakistan is a largely patriarchal society where women face numerous challenges in terms of setting up and managing business ventures while respecting the cultural norms and practices deeply embedded in the society. This a review paper and the methodology used is desk research. A number of scholarly articles and reports have been reviewed to get an insight into this topic. The paper mainly attempts to identify the definition of empowerment, women empowerment; major challenges faced by women globally, Pakistani women in the labour market, the outreach of Microfinance Institutes to women entrepreneurs in Pakistan. Last but not the least, it provides recommendations for the future on how to further increase women empowerment in Pakistan.