Disinvestment is a process whereby the government withdraws a portion of the equity in the public sector enterprises. Disinvestment has supposed to be strategy in the hands of government to improve the functioning and profitability of public sector enterprises and also raise funds to mitigate its fiscal deficits. In this study disinvestment of the government shareholding has been taken as an event and pre disinvestment mean value of financial parameters for financial years (1997-98 to 2002-03) is compared with post disinvestment mean value of financial years (2004-05 to 2010-11).our result shows that disinvestment improves the profitability and liquidity position of NTPC while it has affected the efficiency position negatively.