Access to finance is regarded as a major challenge to businesses in developing countries and lease financing is cited as a possible solution to this financing challenge. This study sought to determine the role of leasing on the performance of Small and Medium Enterprises in Kenya with specific reference to Nairobi County. To achieve this objective, Small and Medium Enterprises in Nairobi County were randomly sampled and surveyed using questionnaires. The collected data was analyzed using descriptive statistics and regression analyses. The study found out that the majority of Small and Medium Enterprises in Nairobi use leasing as a means of financing their business. In determining what impact leasing has on firm performance, the results indicate that firms that used leasing recorded superior performance in terms of return on assets, return on capital employed and revenue growth, compared to those that did not use leasing. The findings also indicate that performance of the firm is also affected by firm and owner characteristics. The study concludes with appropriate recommendations supporting development of lease finance and suggestions for further research.