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Social cohesion is considered to be important for a society. The role of state institutions is to bring state closer to its population. The effective connection between state and society may be possible only through changing institutions. Present study is an attempt to explore the impact of institutional quality in enhancing social cohesion in a society. For analysis purpose, the study uses five year average panel data from 1990 to 2010 of 68 developing countries. For estimation purpose fixed effect and random effect models as suggested by Hausman test have been used in different specification of the model. The results of the study reveal that better institutional quality enhances social cohesion and income inequality is a threat to social cohesion while diversity is not a harmful to social cohesion. Furthermore, equality and prosperity both enhance social cohesion. The study recommends that on one hand efforts should be made to reduce inequality and on the other hand there is a need to build up social cohesion. These can be achieved through redesigning the institutions ensuring that it is better fit to local needs. The study concludes that social cohesion can be achieved through introducing and re-structuring the policy reforms in developing countries.