This research examines the channels through which monetary policy variables affect macroeconomic variables in an emerging economy of the Republic of Tajikistan. The Granger Causality testing in VAR framework is employed to examine the effectiveness of transmission channels. Our empirical results revealed that the interest rate lacks the capability to influence aggregate demand and inflation. The dire consequences of low interest-elasticity of income are evident in the form of an ineffective monetary policy in Tajikistan. Monetary transmission does not trigger the growth cycles through real variables because the economy of Tajikistan is plagued with structural deficiencies including inefficient financial markets, lack of financially shrewd intermediaries; low capital formation and a high level of dollarization. Key Words: Monetary Policy, Dollarization, Tajikistan, Monetary Transmission.