The present research is focused on impact of educational institutions on literacy rate. Traditionally literacy has been commonly defined as the ability to read and write at an adequate level of proficiency that is necessary for communication. According to 2011 census literacy of Dakshin Dinajpur district is 73.86 %, whereas national literacy is 74.04 % which is near to national literacy. There is 1169 primary and 302 upper primary school which create a vital role on literacy. This study reveals that literacy rate is proportionally linearly related to the educational institutions. In this paper analysis is the dependent and two independent data by matrix technique and multiple correlation. It has been found that there is a very strong correlation between literacy rate and educational institutions.