The study aimed to analyse the impact of macroeconomic conditions on firm level leverage of the listed non-financial firms of Pakistan and India. Data from 929 listed firms from Pakistan and India was collected for the period 2008-2019. Panel data regression (fixed effects model) was used to estimate the relationship between macroeconomic conditions and firm leverage. The findings of the study revealed that in Pakistan real interest rate, exchanges rates, public debt and GDP growth rates significantly influence firm leverage whereas in India none of the macroeconomic variables have a significant influence on firm leverage. In Pakistan real interest rate, exchange rate, corruption, public debt, banking sector development, stock market development negatively influence firm leverage whereas unemployment rate, GDP growth rate and corporate taxes has a positive influence on firm leverage. In India, on the other hand, real interest rate, corruption, exchange rate and public debt negatively influence firm leverage whereas the rest of macroeconomic variables have a positive influence firm leverage. Moreover, the analysis of slope and differential slope coefficients revealed that the only the influence of exchange rates, public debt and GDP growth rates significantly differs in Pakistan from that of India.