The National Rural Health Mission (NRHM) was launched all over the country from April 2005 for a seven year period 2005-12. In Nagaland, the programme was launched only in February 2006. A mid term performance review of the Mission by the CAG of India revealed that the basic inputs were not in place. State had not prepared Perspective Plan (2005-12) and household and facility survey covering all villages and health centres was yet to be completed. The upgradation of District Hospitals, Community Health Centres, Primary Health Centres and Sub-Centres to the level of Indian Public Health Standards has not been achieved. The State Health Society has not framed any time bound programme to train ASHAs up to the fifth module. Four out of 11 districts were selected for detailed review based on random sampling method and records of the State Health Society (SHS), four District Health Societies (DHSs), four Community Health Centers (CHCs) out of 10 in the selected districts, eight Primary Health Centres (PHCs) out of 37 in the selected districts and 16 Sub Centres (SCs) out of 176 in the selected districts were examined in detail. Out of a total expenditure of Rs. 53.26 crore incurred on the activities of the Mission during the review period, Rs. 43.33 crore (81 per cent) was covered in audit. The implementation of the Mission activities as noticed in the mid-term review for the period 2005-08 was not encouraging due to non-completion of household and facility survey within the targeted date and non-identification of the gaps in rural healthcare. There was a shortfall in the creation of infrastructure and inadequate number of medical officers, medicines and equipment. This was further compounded by non-release of State share of funds and non-existence of monitoring mechanism in the Department which points to the possibility that the State may not achieve the objectives of the Mission by the target date.