Knowledge sharing plays a crucial role for the success of organizations and it becomes challenging for organizations in developing countries to urge employees for sharing knowledge because people hesitate to share their knowledge and feel insecure. There is special need to recognize and introduce significant factors in order to motivate and inspire employee?s behavior to share knowledge in organizational settings. The main purpose of this study is to determine and examine the factors that encourage and enhance knowledge sharing among employees. This study has explained the role and importance of psychological contract and organizational climate in enhancing employee knowledge sharing behavior in organizations in context of Pakistan. Quantitative research has been adopted as a research strategy for this study and survey questionnaire has been used as a data collection tool. Data is collected from 201 teachers of public and private colleges of Islamabad. Data is investigated by descriptive statistics and linear regression through SPSS. Results demonstrate that organizational climate and psychological contract has positive and most significant impact on knowledge sharing behavior. Knowledge sharing behavior is responded more by transactional psychological contract than the relational PC. These findings propose that education sector ought to look into ways of inspiring and boosting psychological contract and organizational climate in order to facilitate knowledge sharing behavior among teachers. This study also concludes that professionals at educational institutes require supportive organizational climate for effective flow of knowledge because when teachers are more integrated with each other, they are more confident and convinced to share their valuable knowledge with each other.