Effective Monitoring and Evaluation (M&E) capacity ensures project efficiency, sustainability, and long-term success of NGO-based projects. The aim of this research was to determine the effect of monitoring and evaluation capacity on the performance of Non-Governmental Organization-based projects in Kenya, with a case study of Kibera Informal Settlement. This study was anchored on the Theory of Project Implementation, Fiedler Leadership Contingency Theory, Theory of Change, Stakeholder Theory, and Edgar Schein's Model of Organizational Culture. An explanatory research design was adopted. The targeted population was 159 respondents comprising project managers, M&E officers, and community leaders from 53 completed NGO projects in Kibera Informal Settlement between 2019 and 2024. This study was based on primary data gathered through the utilization of structured questionnaires with both closed-ended and open-ended questions. The pilot study was conducted to help the researcher modify and improve the validity and reliability of the questionnaire. The collected data was analyzed using descriptive statistics and multivariate regression analysis, and presented in frequency tables, means and standard deviations. Ethical issues were adhered to by ensuring that authorization was obtained from Kenyatta University and NACOSTI prior to data collection. The normality, multicollinearity, and heteroscedasticity tests were conducted to check the accuracy of the data before estimation was done. The findings of the study found evidence to support the existence of M&E capacity dimensions as they affect performance of NGO-based projects in Kibera Informal Settlement, Kenya. Regression analysis results show that M&E capacity had a positive significant impact on NGO project performance. Besides, it was established that 64.8% of the changes in NGO project performance is explained by changes in M&E capacity dimensions, namely: M&E human resource capacity, M&E technical capacity, M&E stakeholder capacity, and M&E organizational capacity. The study recommends that NGOs should prioritize investment in M&E human resource development by establishing comprehensive training programs and ensuring adequate staffing levels. Secondly, the study recommends that M&E technical capacity should be enhanced through procurement of necessary equipment, investment in data management systems, and staff training on technological skills. Thirdly, the study recommends strengthening stakeholder engagement by establishing clear communication channels and implementing transparent reporting mechanisms. Lastly, on the issue of organizational capacity, the study recommends that NGOs should establish dedicated M&E units and foster a culture that values evidence-based decision making. Future studies may be conducted on other similar projects particularly in governmental organizations given that the current study focused on non-governmental organizations operating in informal settlements.