Formative assessment, described as "the process of appraising, judging or evaluating students' work or performance and using this to shape and improve students' competence", is generally missing from medical schools of Pakistan. Progressive institutions conduct "formative assessment" as a fleeting part of the curriculum by using various methods that may or may not include feedback to learners. The most important factor in the success of formative assessment is the quality of feedback, shown to have the maximum impact on student accomplishment. Inclusion of formative assessment into the curriculum and its implementation will require the following: Enabling Environment, Faculty and student Training, Role of Department of Medical Education (DME). Many issues can be predicted that may jeopardize the effectiveness of formative assessment including faculty resistance, lack of motivation from students and faculty and paucity of commitment from the top administration. For improvement in medical education in Pakistan, we need to develop a system considered worthy by national and international standards. This paper will give an overview of formative assessment, its implications and recommendations for implementation in medical institutes of Pakistan.