The performance of commercial banks in Kenya has been declining in the recent years evidenced by decline in return on assets and return on equity from 3.99 percent and 24.7 percent in 2016 to 3.5 percent and 22.5 percent in 2018. This trend indicates a challenge in the entire banking industry regarding profitability. Agency banking was introduced to increase the reach of banks to enable banks to reach the unbanked. Agency banking can therefore enhance market share and performance of banks. The purpose of this study was to examine the influence of agency banking transactions on financial performance of commercial banks in Kenya. The specific objectives of the study were to assess the influence of cost of transactions in agency banking, number of transactions in agency banking and value of transactions in agency banking on financial performance of commercial banks in Kenya. The study was guided by agency theory, financial intermediation theory and bank led theory. Comparative research design was applied in the study where the 16 commercial banks that have adopted agency banking in Kenya were the study population. Secondary data was used and it was obtained from the CBK bank supervision annual reports (2013-2017). Quantitative data collected was analyzed using descriptive statistics such as means, standard deviations, percentages and frequencies. Inferential statistics were also derived through panel data regression method. The results from the analysis were presented in figures and tables. The study findings showed that value of transactions had a significant positive effect financial performance of commercial banks when measured using ROA and ROE. The study findings showed that number of transactions had no significant effect on ROA or ROE. Further findings indicated that cost of transactions had no significant effect on ROA or ROE. From the study findings, the following recommendations were made. First, commercial banks should motivate their clients to transact high value transactions through their agents and not only the small value transactions. Further, banks should focus on value of transactions, not just on volume when they are marketing and designing policy for agency banking. Lastly, banks should focus on gaining economies of scale through increasing volumes of agency banking transactions to reduce unit cost. They should hence ensure that agents have enhanced customer security and transaction security to attract more customers to feel confident to transact through the agents.