Abstract- One of the issues that always have been of great concern in organizational debates is organizational effectiveness. When an organization makes attempts to fulfill its goals, internal instability and external threats are considered as impediments which may either delay or sabotage the whole process. Several studies have investigated the impacts of contextual factors on organizational effectiveness. As we live in the age of knowledge, knowledge management has become a substantial source for achieving competitive advantages. In order to do so, organizations need to identify organizational factors influential to knowledge management. When in an environment knowledge creation, sharing, learning, upgrading, restructuring and the use of knowledge as an asset to organization and its customers are both supported and encouraged, it can be administrated through the implementation of knowledge management. In other words, knowledge management acts as a tool to deal with degradation factors. This research primarily aims to investigate the relationship between context variables (including strategy, leadership, organizational culture and organizational structure) and organizational effectiveness, with taking into consideration the impact of knowledge management as a mediating variable. To this end, 224 questionnaires consisting of 64 statements (with Cronbach's alpha of .913) were distributed among employees of 14 Organization of Mashhad Municipality. Chi-square test and linear regression were used to test the hypotheses. Results indicate that all context variables are significantly associated with organizational effectiveness. Moreover, there is a significant relationship between context variables and knowledge management and also knowledge management plays a mediating role in relationship between context variables and organizational effectiveness

Keywords