Nowadays, nepotism is one of the undesirable organizational phenomena that exist in various forms in most countries, especially in developing countries and impacts on employees’ performance. Consequently, the purpose of this study is to investigate the effect of nepotism on employee performance by the mediating role of employee competencies (self-competencies, team competencies, change competencies, communication competencies, ethical competencies, and cultural competencies). Population of the study consists of Travel and tourism services companies' employees in Tehran. In order to obtain sample size, simple random sampling method and Cochran's formula were applied. To obtain the required sample size, simple random sampling and Cochran formula are used. To gather the required data, library and field methods are used. Present study is an applied study in terms of purpose and in terms of collecting data it a descriptive survey study. To analyze the data, confirmatory factor analysis and structural equation modeling, available in LISERAL and SPSS software are used. The results showed that nepotism has a significant negative effect on employee performance, self-competencies, team competencies, ethical competencies and cultural competencies. Also self-competencies, team competencies, change competencies and communication competencies have a significant positive effect on employee performance.