Despite providing financial support and access to over 48% of the adult population and 82% of small enterprises in Kenya, Deposit Taking Savings and Credit Cooperatives faced intense competition from other financial institutions, leading to reduced competitiveness. The general objective of the study was to investigate the effect of dynamic capabilities on the competitive advantage of Deposit Taking Savings and Credit Cooperatives in Nairobi City County, Kenya. The specific objectives were to explore the effect of marketing capability, knowledge management capability, technological innovation capability, financial management capability on the competitive advantage of Deposit Taking Savings and Credit Cooperatives in Nairobi City County, Kenya. The study was grounded in Marketing Mix Theory, Knowledge-Based Theory, Technology Acceptance Theory, Resource-Based Theory, Dynamic Capabilities Theory, and Competitive Advantage Theory. It employed a descriptive research design, with a target population of 47 Deposit Taking Savings and Credit Cooperatives operating in Nairobi City County. The units of observation included 384 top and middle-level management staff in key departments. The study used a stratefied random sampling for sampling, involving all 47 Deposit Taking Savings and Credit Cooperatives in Nairobi. Additionally, a sample of 196 top and middle management staff was selected using the Yamane Formula. A structured survey tool was utilized for gathering data. Secondary data on competitive advantage was sourced from published articles, referred journals, and other relevant materials. The data gathered included both quantitative and qualitative elements, analyzed descriptively and inferentially, with averages, frequencies, and percentages serving as useful metrics. Qualitative data was analyzed using content analysis and presented in narrative form. The relationships between variables were examined through regression analysis, with tables used to summarize responses. The study analyzed the response rate to understand the participation and engagement level of 196 respondents in a sample of Deposit Taking SACCOs, consisting of 55 senior managers and 141 middle-level managers. The overall response rate was 94.4%, with senior managers returning 90.9% of questionnaires and middle-level managers returning 95.7%. The regression analysis showed that marketing capability, knowledge management capability, technological innovation capability, and financial management capability had a significant positive impact on the competitive advantage of Deposit Taking SACCOs in Nairobi City County. These capabilities contributed to competitive advantage through various factors, such as market expansion, communication efficiency, and financial stability. Recommendations for SACCOs included developing strong marketing strategies, implementing knowledge management systems, investing in robust technology, and enhancing financial management practices. Suggestions for future studies encouraged further exploration of dynamic capabilities and competitive advantages in SACCOs, as well as other financial institutions in Kenya.