OBJECTIVE To determine the effectiveness of tranexamic acid (TXA) in reducing blood loss during and after caesarean section (CS), as well as its safety. METHODS A randomized double-blind placebo controlled study. METHODS The Lyari General Hospital, Karachi, from March 2009 till April 2011. METHODS Women undergoing lower segment caesarean section (LSCS) were enrolled. The patients were randomized to receive either injection TXA or distilled water just before the surgery. Blood loss was collected and measured. First from the time of placental delivery to the end of LSCS and later from the end of LSCS to two hours postpartum. Haemoglobin, urine analysis, liver and renal functions were tested in both the groups. Mean values blood loss were compared using t-test with significance at p < 0.05. RESULTS Tranexamic acid significantly reduced the quantity of blood loss from placental delivery to the end of LSCS which was 356.44 ± 143.2 ml in the TXA group versus 710.22 ± 216.72 ml in the placebo group (p < 0.001). It also reduced the quantity of blood loss from the end of LSCS to 2 hours postpartum which was 35.68 ± 23.29 ml in the TXA group versus 43.63 ± 28.04 ml in the placebo group (p = 0.188), was not significant. No complications or side effects were reported in either group. CONCLUSIONS Tranexamic acid significantly reduced the amount of blood loss during the LSCS, but it did not reduce the blood loss significantly after the caesarean section. Its use was not associated with any side effects or complication like thrombosis. TXA can be used safely and effectively in women undergoing LSCS to reduce intraoperative blood loss.