This paper focuses on the socio-economic impact of HIV/AIDS on education sector in Mbeya Urban District. The analysis done goes further than reporting the HIV/AIDS incidence and prevalence by quantifying the actual monetary and non-monetary costs caused by the pandemic to the sector.This paper is organised in 4 major sections. Section 1 provides the background of the study, the analytical framework and the study objectives. Section 2 presents the approach and study methodology while section 3 discusses the impact of HIV/AIDS in education sector where both supply and demand side effects are highlighted. Finally, section 4 gives conclusion and recommendations.