Dividend Policy is one of the most discussed issues in finance. At the time of dividend payment management have to keep a balance between the expectations of shareholders and firm’s interest. Several questions remain unanswered related to dividend policy because of diverse and conflicting theories and empirical research. This research work tries to give an outline of the important dividend policies and indentify major factors that determine the dividend behavior in Indian steel industry. For this the determinants of dividend policy have been studied by using Regression Model and correlation pertaining to Indian steel industry for the period 2005-06 to 2009-10. The sample (30) companies for each year are based on their market cap. It may be concluded that lagged dividend, PAT and interest are the most important factors affecting dividend decision of an industry. Thus, the study provides the future researchers some very useful input in dividend policy.