This article aimed to explore the impact of performance appraisal system on organizational climate in Gaza Electricity Distribution Company. Focusing on the importance of organizational climate, this study tested the performance appraisal system's influence which consists of several constructs including (appraisal process, appraisal method, and appraisal feedback). The survey design employed a probability-stratified random sampling method, and questionnaires were distributed to collect data. In total, 221 individuals from the Gaza Electricity Distribution Company's six branches took part as participants, with a response rate of 82.16%. For the analysis, a quantitative research methodology was employed. In order to analyze the structural equation model and consider the study hypothesis, AMOS software was employed. The study findings showed that the organizational climate is directly, strongly and significantly influenced by the performance appraisal system (74.8%). The results also showed that the two dimensions, appraisal method and appraisal feedback, had the greatest influence on organizational climate, whereas dimension appraisal process had the least.