Owing to the current business environment, food manufacturers must provide high-quality products while simultaneously providing competitive prices for their customers. Cost of quality (COQ) can play a crucial role in fostering organizational competitive performance through reduced costs. The aim of this paper is to analyze the interrelationship between the application of COQ and organizational performance in the context of Palestinian Food Manufacturing Organizations (PFMO). The study employs a questionnaire through which data is collected from 119 PFMO. The collected data is analyzed using the partial least square structural equation modeling (PLS-SEM) technique. The results of this study suggest that application of COQ practices has a strong effect on the organizational performance of PFMO. External, internal, and prevention costs were all found to have a positive impact on organizational performance of PFMO. However, appraisal cost has no impact on organizational performance. The study provides significant value to quality management literature on the role of COQ practices in enhancing performance of food manufacturers in a developing country context and responds to calls for enhancing organizational efficiency in today’s complex business environments.