The importance of this study draws from the necessity and novelty of the issue it poses. Despite the importance of the institutional investor from the practice and theory approach, it does not have a vital role in Egypt. Therefore, this study aimed to determine the impact of institutional investor in order to increase both the size and liquidity of Egypt Stock Market. The study uses both descriptive economic analytical and quantitative methodology. The study concluded that Institutional investor has many characteristics that distinguish it from individual investor that would enable it to develop and modernize stock market and encourage competition in order to achieve an increase in the efficiency of financial system. Therefore, Egyptian Financial supervisory authority should take a series steps to serve as ideal solution for establishing a strong base for Egypt's institutional investor to encourage the private sector to finance through securities markets by granting exemption and dimension of the factors that drive away the capital because of lengthy procedures and administrative complications. In conclusion, the study provided some suggestions to improve the performance of institutional investors in the stock market in order to increase market competition.