Performance appraisal is considered to be the most significant element of performance management but often the former involves controversial practices, among other variables influenced by accuracy and effectiveness. However, it is generally understood that performance appraisal system commonly result into positive organizational outcomes, yet the accuracy of the measuring tools is still an arguable issue with more criticisms. The ongoing matters are measured and tested as a case study approach by paying attention on higher education institutions. Since higher education is progressively playing a vital role in economic competitiveness of a country. Aiming to examine the effect of rater motivation and rater training on performance appraisal process in public sector universities of Khyber Pakhtunkhwa, Pakistan and recognized as a critical contribution to organizational and people’s performance. Thus, this study finds the effects and consequences of rater motivation and rater training on performance appraisal system. This study is survey based, 300 questionnaires in total were distributed among the faculty of public sector universities of Khyber Pakhtunkhwa (KP), Pakistan. Out of which 160 were received back recording response rate of 53%. Findings of this study indicate that there was positive and significant relationship between rater motivation and performance appraisal and also between rater training and performance appraisal in public sector universities of Khyber Pakhtunkhwa, Pakistan. The current study offers researchers with the opportunity to search performance appraisal from a new perspective which has never been explored before in a developing country like Pakistan.