This thesis examines the evolution, quality and measures of improvement of Tanzania's commercial banking regulation and supervision. It is based on the belief that regulation and supervision play an essential role in maintaining a sound and stable banking industry. Although the subject of banking regulation and supervision has been widely discussed in European Union countries and in the United States, it is only now that the subject is becoming of growing importance to Tanzania. The move is necessitated by the need to conform to the political, social and economic transformation that has been taking place in the country since 1986 under the structural adjustment programs (SAPs). The study divides the country's banking and its regulation and supervision into three periods: the pre and colonial (1880-1960), the post-colonial (1961-1989) and finally, the contemporary (1991-2000). Each of these periods is examined separately, and then comparedt o eacho ther. The researcherb elieves that, in reviewing the past, we are able to determine future developments. The findings of the study indicate that the main features of Tanzania's commercial banking sector and its legal framework during the colonial and post-colonial era have been largely determined by the experiences of colonialism. Despite the Arusha Declaration policies established six years after independence, the banking industry and its legal framework of regulation and supervision remained overshadowed by government directives and Bank of Tanzania sector guidelines. The year 1991 saw major reforms of the industry by government, partly in response to the International Monetary Fund and the International Bank for Reconstruction and Development initiatives, (SAPs). However, in an attempt to establish a contemporary banking legal framework, the government relied on models that ignored the growing difference between developed economies and developing economies. Consequently, the current framework though satisfactory, has some loopholes and is in certain cases unable to take into account the realities of the local environment. Furthermore, the empirical findings of the study have illustrated that the practical aspects of the regulation and supervision of commercial banks have significant shortcomings. These problems are particularly acute because the banking industry is still vulnerable to major structural change through economic frailty, mergers, bankruptcy and failures. After identifying these weaknesses, the study makes recommendations designed to help policy-makers strengthen the law, regulatory and supervisory structure, by taking into account the local banking industry environment. Finally, the study is concluded with a summary assessment of the period under review. It is argued that the 1990's changes were indeed a step towards prudential banking regulation and supervision in Tanzania. Nevertheless, in the light of the shortcomings mentioned above and as part of the emphasis on an effective and efficient framework, the need constantly to review the system and adapt changes that are designed to improve the banking industry and its regulation and supervision remain essential in achieving prudential standards.