CPU scheduling is one of the basic factors for performance measure of multitasking operating system which makes a commuter system more productive by switching the CPU among the processes. The performance of the CPU scheduling algorithms depends on minimizing waiting time, response time, turnaround time and context switching, and maximizing CPU utilization. Round Robin (RR) is the most widely used CPU scheduling algorithm in multitasking operating system. The efficiency of a multitasking systemcomprising with Round Robin CPU scheduling relies onthe selection of the optimal time quantum. If the time quantum is longer, the response time of the processes becomes too high. On the other hand, the shorter time quantum raises the amount of context switch among the processes. In this paper, a modified CPU scheduling algorithm, called Round Robin with Dynamic Time Quantum (RRDTQ) is introduced for enhancing CPU performance using dynamic time quantum with RR. This time quantum is calculated from the burst time of the set of waiting processes in the ready queue. The experimental results show that the proposed algorithm solves the fixed time quantum problem and decreases the average waiting time and turnaround time compared to traditional RR algorithm.