This study investigates the military stability of South Asia, after overt display of nuclear explosions by Pakistan and India in May 1998. The two countries have been loggerhead on Kashmir dispute since their inception in 1948. Both have fought three major wars and are in the process of fighting a limited war in the Himalayan Mountains for the last seventeen years. The specific emphasis was on the analyses of the genesis of problem and the roots of mistrust between the two countries. The present day military scenario and relationship of both countries have been discussed with special emphasis on the military government in Pakistan and hard-line religious government in India. The recent Kargil crisis in 1999, soon after nuclearization of both countries was also discussed during the course of study. The study explained the problem areas, arms race and nuclear thresholds of two countries. It also briefly touched upon the reasons for nonadherence of nonproliferation treaties in vogue by the two countries. The study also includes the overall geopolitical environments of South Asia including the China factor in the region. The study advocates that the world, in general, and South Asia, in particular, will remain under the clouds of nuclear holocaust due to Pakistan and India, unless Kashmir problem is amicably solved. In this regard the importance of intervention by world powers especially United States is extremely important. Both Pakistan and India have failed to resolve their core issue of Kashmir by bilateral talks so far; thus, third party intervention is extremely essential. If world powers fail to do so, it is a matter of time only when both countries will once again indulge in another full-scale war, which may have a potential to turn into a nuclear war.