High performance work systems are becoming the backbone of organizational systems. These systems are one of the most important factors affecting various organizational outcomes. This study is an attempt to highlight the importance of HPWS for the organizations. It aimed at finding the impact of High Performance Work Systems (HPWS) on service performance. The study further explored the mediating role of Psychological empowerment in the relationship between HPWS and service performance. A purposive sample of 300 respondents from different service sector organizations of Pakistan was selected for the study. The results exhibit a positive and significant impact of HPWS on service performance. The hypothesized mediating role of psychological empowerment in the relationship between HPWS and service performance was partially supported. The limitations, implications and direction for the future research is also highlighted.