During past three decades, inward remittances have emerged as a significant source of financial inflows to many developing countries. Yet, remittance inflows are not an unmixed blessing: the Dutch disease theory postulates that these inflows can lead to appreciation of the real exchange rate with adverse implication for structural adjustment and growth in the recipient economies. This paper investigates the impact of remittances on the real exchange rate in developing countries using a newly constructed panel dataset. The analysis pays particular attention to possible difference between remittances and other firms of resource inflows in their impact on the real exchange rate. The results reveal that remittances lead to significant appreciation of real exchange rate, and the magnate of appreciating for a given level of remittance inflow depends on the nature of exchange rate policy regime. There is also evidence the degree of appreciation associated with remittance inflow is significantly higher compared to official development assistance and foreign direct investment leads to the depreciation of the real exchange rate.