Most of the studies prove that the employees of the public sector organization are more loyal with the organization but the productivity level of government organization is not as much impressive as the private sector, that create question mark on employees satisfaction and employees loyalty. Keeping in view this phenomena this study is been conducted with a sample of 42 employees from public sector organization. The main concern of this study is to have the positive change in the government sector organization by influencing the behaviour of the government employees and by increasing their satisfaction level and the loyalty. That is only possible by having the knowledge of the relationship between the employee's satisfaction and loyalty, particularly related to the public sector, and what are the aspects that are supporting and directing their relationship. Simple regression and correlation technique has been used in this study to know the impact of the factor affecting the employee's satisfaction and employee's loyalty. The results of the study revealed a positive relationship between employees loyalty and employees satisfaction. Employee's satisfaction is measure with respect to empowerment and participation, working condition and training & development. The results show that the selected variables have significantly and positively affecting the employee's satisfaction and the employee's satisfaction has positively related with employee's loyalty.