A correlational research design was employed to investigate the impact of family functioning and personal growth initiative (PGI) on psychological wellbeing in postgraduate students. The hypotheses of this study were that there is a positive relationship between family functioning, personal growth initiative (PGI) and psychological wellbeing in postgraduate students. It was also hypothesized that family functioning and personal growth initiative (PGI) would predict psychological wellbeing in postgraduate students. Sample comprised of N = 198 postgraduate students (M = 24, SD = 2.74) from Higher Education Comission (HEC) recognized universities.Measures included Family Assessment Device (FAD; Epstein et al., 1983), Personal Growth Initiative Scale-II (PGIS-II; Robitschek et al.,2012) and Ryff’s Psychological Wellbeing Scale (PWB; Ryff, 1989). A positive significant correlation was found among the variables. Also, two subscales of Family Assessment Device (FAD) i.e., Affective Involvement and General Family Functioning along with Readiness for Change scale of Personal Growth Initiative Scale-II (PGIS-II) were found to be strong predictors of psychological wellbeing. Thus, the significance of family functioning along with PGI with regard to psychological wellbeing, has beenhighlighted in this study.