Introduction: It is vital that the managers identify and use some appropriate methods to increase job satisfaction. Performance appraisal is one of the essential task for managers to achieve organizational goals , improving the quality of services and one of the factor for job satisfaction.

 Aim: The aim of the study was to assess the correlation between quality of performance appraisal and job satisfaction of nurses in hospitals of Arak University of Medical Sciences.

 Method: This study was a descriptive – correlation that all nurses (133) in teaching hospitals of Arak in 1390 were selected. Data were collected by two questionnaires performance appraisal had 44 and job satisfaction had 20 questions. Their reliabilities were 0.85 and 0.72 respectively by Cronbach Alpha. Data analysis was done by Spearman correlation coefficient and used software SPSS 13.

 Results: Results showed that nurses believed that head nurses have moderate competence for the implementation of performance appraisal (80.5%). Also, qualities of process and outcome performance appraisal were average level respectively, by 50.4 % and 60.9% of nurses. The majority (72.2%) of nurses expressed moderate level of job satisfaction. There was a significant relationship between a feeling of job satisfaction and nurses’ perceptions of head nurses’ competence, process and outcome qualities(P<0/05).