Dividend policy (DP) of corporate sector is widely researched topic in finance however, it remains a debatable issue to decide what factors determine the DP. The objective of this paper is to analyze the impact of dividend policy (DP) on shareholders wealth (SW) of Information Technology (IT) sector in India. Out of 84 firms listed in National Stock Exchange (NSE), 32 firms were considered for analysis, (19 dividend paying firms and 13 dividend non-paying firms). Various factors affecting DP such as market value (MV),lagged market value (MVt-1), price earnings ratio (PER), lagged price earning (PERt-1) dividend per share (DPS), book value(BV) earnings per share (EPS) and retained earnings (RE) are used for analysis. Stepwise regressions to estimate the impact of RE, PER, PERt-1, DPS, and MVt-1 on MV (DP) reveals that the DP (MV) of overall IT sector is strongly influenced by RE, PER, PERt-1, EPS, MVt-1, DPS which fact shows that the DP of IT sector is significantly influenced by the selected financial variables during the period of the study. More specifically, the overall regression result proves that the DP (MV) is significantly and positively influenced by the DPS and RE.