INTRODUCTION Establishing highly sensitive, affordable diagnostic test covering all species of malaria is needed in countries like Pakistan that has significant prevalence of this disease. Conventional tests, like microscopy are widely used but it has certain performance related limitations. Rapid diagnostic tests (RDTs) for plasmodium have not achieved greater sensitivity than microscopy. Polymerase chain reaction (PCR) based methods have shown lot of promise and these are replacing microscopy as gold standard. OBJECTIVES To establish a real time PCR for malaria diagnosis and to compare its accuracy with microscopy and an antigen based RDT. STUDY DESIGN AND SETTING This cross sectional analytical study was conducted at Military Hospital and Armed forces Institute of Pathology Rawalpindi, Pakistan from January 2011 to December 2011. SUBJECTS The study included 300 clinically suspected patients of malaria. 3 METHODS Venous blood sample from each patient was tested for malarial parasite by microscopy and antigen detection assay (OptiMal). Parasite index was calculated. Plasmodium genus specific in house real time PCR, on all specimens was performed targeting small subunit rRNA gene. Diagnostic accuracy of three tests were compared and cost analysis done. RESULTS Out of 300 patients malaria parasite was detected in 110, 106 and 123 patients by microscopy, OptiMAL and PCR respectively. Real time PCR was 100% sensitive while microscopy and OptiMal had sensitivity of 89.4% and 86.2% respectively. All methods were 100% specific. The cost per test was 0.2, 2.75 and 3.30 US$ by microscopy, OptiMal and PCR respectively, excluding the once capital cost on PCR equipment. Conclusion: Real time PCR for diagnosis of malaria was successfully established. The technique is highly sensitive and affordable. It is recommended to be incorporated in the diagnostic algorithm for malaria in Pakistan. Key Words: Malaria, Microscopy, Rapid Diagnostic Tests (RDTs), Polymerase Chain Reaction (PCR).