The paper analyses the factors influencing women's employment in the formal manufacturing sector and takes into account both demand and supply side determinants of gender composition of employment. On the basis of data from 100 manufacturing enterprises in Dhaka city, it has been concluded that the characteristics of enterprises and the attitude of employers towards women's employment have emerged as significant determinants of female employment in manufacturing enterprises. Among the characteristics of enterprises, the export orientation of industries has been observed to have largest positive impact on female employment. The experience of the enterprises with female employees do not provide an evidence of higher non-wage and/or non-financial costs of employing women. Female employees did not show either greater absenteeism or larger turnover rate compared to their male counterpart. Moreover, such non-wage costs are often converted into financial costs and are covered through adjustment of financial benefits (or negative benefits) provided to women. Even if there is no evidence that female employees take leave more frequently or require the provision of expensive physical facilities at the work place, an apprehension about these problems prevail among the employers, especially in the enterprises which have few female workers. Such apprehension acts as a deterrent to the employment of female workers.