The study examined the relationship between budget allocation and the performance of healthcare services at Mulago National Referral Hospital in Central Division, Kampala, Uganda, focusing on the period between 2020 and 2023. The study aimed to determine the relationship between budget allocation and the performance of healthcare services at Mulago Hospital. A cross-sectional quantitative research design was employed, utilizing both primary and secondary data. The study population comprised 280 respondents, including medical staff, administrative personnel, and finance officers. Questionnaires and document reviews were used for data collection. Data was analyzed using SPSS version 25, employing Pearson correlation coefficient and regression analysis. The study revealed a strong positive correlation (r = 0.784, p < 0.01) between budget allocation and healthcare service performance at Mulago Hospital. Budget allocation to medical equipment significantly influenced service delivery efficiency (β = 0.612, p < 0.001), while staffing budget allocation showed a moderate positive effect on patient satisfaction (β = 0.487, p < 0.01). Infrastructure development funding demonstrated a significant relationship with service quality outcomes (β = 0.521, p < 0.001). The regression model explained 61.5% of the variance in healthcare service performance (R² = 0.615). Budget allocation had a substantial impact on healthcare service performance at Mulago Hospital. Adequate funding in medical equipment, human resources, and infrastructure development were critical determinants of service quality, efficiency, and patient outcomes. However, budget constraints and irregular fund disbursements hindered optimal service delivery. The study recommended that the Ministry of Health increase budget allocation to Mulago Hospital by at least 25% to match the growing patient demand. Timely disbursement of allocated funds should be ensured quarterly rather than irregularly. Priority should be given to medical equipment procurement and staff recruitment to address critical gaps in service delivery.