The objective of this research is to understand the importance of exchange relationships between a leader and his subordinates aimed at improving performance in the universities of Islamabad. Data was gathered by means of questionnaires from a sample of 358 employees (academic and non-academic) and was examined using Statistical Package for Social Sciences (SPSS 22). The results show that both task and contextual performance have a positive relationship with LMX and should be given due consideration in managing human resources in order to achieve organizational objectives effectively. Results indicate that OC do not moderate the relationship between LMX and TP and between LMX and CP. Results also indicate that OC acts as a mediator between LMX and TP and also between LMX and CP. Conclusions of the study have several important theoretical and practical implications.