The relationship between trade and peace has been debated by the policy makers, academicians and general public. Such deliberations often end in contesting conclusions. For some, trade is a potential tool to mold relationship and make peace between states; for others trade may become a source of conflict. Yet others would see no substantial relationship between trade and peace. These disparate perspectives exhibit that relationship between trade and peace is complex and can be explained in different ways. This study thoroughly discusses the above predicament and the varying explanations concerning the issue. Moreover, the study investigates the complex relationship between trade and peace through the example of Pakistan and India relations. This research explores whether trade can be an instrument of peace between these two important South Asian States. Both the countries are nuclear states and their relationship has remained volatile since their inception in 1947. It is a commonly established view that political and military tactics have always been active in deciding the nature of dealings between Pakistan and India. They have always gauged capacities of one another in terms of balance of power which further poses a conventional as well as nuclear threat to the South Asian region. In this scenario, it is important to explore viable options, such as trade, for brining positive change in bilateral relations between two adversaries. This study is an effort in the same direction. It examines the role of trade as an economic tool to create a lasting peace between Pakistan and India. The study underpins its argument through data collected using qualitative methods such as interviews. Besides published reports and documents the views and opinions of traders, academicians and activists have been used to generate discussion about the issue. This research endeavor elaborates the diverse theoretical perspectives about the relationship between trade and peace i.e. Liberal perspective, Realist perspective and Marxist perspective. It argues that the liberal perspective provides better explanation of this relationship if one looks at different historical examples from around the world. The study also takes insights from the historical trade relationship between Pakistan and India to investigate the economic potential of trade. The study is directed to explore whether v there is a possibility for an expansion of trade relations between Pakistan and India? The study finds out that, since, there is an ever growing demand for quality goods and services at a reasonable price in both the developing countries with their subsequent conventional and populated economies aspiring for prosperity through commerce; there is a need for not only trade beyond continental borders but also within i.e. mutual trading relationship. Moreover, trade will play a complimenting role and even better if the economies of both countries are experiencing development, prosperity and growth. The analysis verifies the subsequent argument put forward under three schools of thought and concludes that trade possess the capacity to play an active role in mollifying strained relations between Pakistan and India and begin an era of peace and harmony in the region.