The paper is undertaken to investigate the nature and function of Literary Theory. Since the phrase ‘Literary Theory’ (LT) is not a new word, it has been explained and elucidated by many LT practitioners and professionals before this paper is being conceived. All the LT professionals have opined their viewpoints on the nature and function of the LT, yet its application as an approach to Literature, Culture Studies, Arts, Social Sciences and their cognate sub-branches is yet to be diffused among young scholars and students. The paper demonstrates the responses to the question why it happens at institute and organization level because from heretofore the scholars continue their journey to the world of research. Hence, the paper is a well-organized structure of the knowledge comprising with its sets that are ideas about what Literary theory is, how it emerges, where it can be used, and what its outcome is.