Financial literacy represents a critical determinant of responsible borrowing behavior and loan repayment performance among microfinance clients. This study examined the influence of financial literacy on loan repayment performance among microfinance borrowers in Wakiso District, Uganda. The study employed a cross-sectional survey design using mixed methods approaches. A sample of 186 respondents comprising microfinance borrowers, loan officers, and institutional managers was selected using stratified random sampling. Data were collected through structured questionnaires, financial literacy tests, and key informant interviews. Statistical analysis included descriptive statistics, Pearson correlation, logistic regression, and chi-square tests using SPSS version 26. The study revealed a strong positive relationship (r = 0.768, p < 0.01) between financial literacy and loan repayment performance. Budgeting skills showed the strongest correlation with timely repayment (r = 0.812, p < 0.01). Financial planning knowledge correlated significantly with loan default prevention (χ² = 28.643, p < 0.01). Borrowers with high financial literacy demonstrated 73.8% on-time repayment rates compared to 34.6% among low literacy borrowers. Record-keeping practices reduced default risk by 64.3%. The regression model explained 67.9% of variance in repayment performance (R² = 0.679). Financially literate borrowers exhibited 2.89 times higher odds of successful loan repayment (OR = 2.89, 95% CI: 1.87-4.46). Financial literacy significantly influenced loan repayment performance among Wakiso District microfinance borrowers. Superior budgeting skills, financial planning knowledge, record-keeping practices, and savings discipline directly enhanced repayment capacity and commitment. However, pervasive financial literacy gaps, limited borrower training, and inadequate institutional support constrained optimal repayment outcomes. Microfinance institutions should implement comprehensive financial literacy training programs as mandatory components of loan disbursement processes. The Uganda Microfinance Regulatory Authority should establish minimum financial education standards for all licensed institutions. Community-based financial literacy campaigns leveraging local leaders and successful borrowers should promote responsible borrowing practices. Borrowers should prioritize financial education acquisition as essential for maximizing credit benefits and avoiding debt distress.