This study investigates the relationship between managerial overconfidence and firm performance in the existence of institutional ownership as a moderating variable. We argue that when the company has a high proportion of institutional ownership, it can lead to more control over managerial decisions and the feedback of the managers, which in turn can improve the performance of the company. There are numerous proxies for measuring managerial overconfidence, but the most appropriate one in the Egyptian environment is an investment-based measure through capital expenditure. A sample of 695 firm-year observations of non-financial firms listed on the Egyptian Stock Exchange from 2014 to 2022 is used. The results indicates that there is a positive and significance association between managerial overconfidence and firm performance in the existence of institutional ownership as a moderating variable and shows that institutional ownership can turn the relationship between managerial overconfidence and firm performance from negative to positive because it plays a controlling role within the company.