The result of this research paper will be helpful for Lao academicians, policy-makers, and aid agencies. First, this paper will provide an empirical finding of the impact of aid on poverty reduction in Lao PDR. This will serve as additional information for Lao academicians. Second, the recommendation will highlight some gaps between policy and implementations; so this may be useful for revising pro-poor policy in the future. Third, this paper may useful for aid agencies as an alternative guideline for enhancing the effectiveness of foreign assistance in Lao PDR.