The study sort to establish the mediating effect of customer loyalty on the relationship between product differentiation strategies and the performance of selected edible oils manufacturing firms in Kenya. Using the Baron & Kenny (1986) four-step approach for conducting mediation analysis, the study hypothesized the relationship between product differentiation strategies and firm performance, product differentiation strategies and customer loyalty, customer loyalty and firm performance and finally the mediation relationship between product differentiation strategies, customer loyalty and firm performance. The study employed an explanatory research design and was guided by the discrete choice theory of competitive advantage and the customer loyalty business model. The target population was 535,840 of which 104 were top and middle-level employees from the sales and marketing departments of the three selected edible oils manufacturing firms and 535,736 were consumers of the products within the middle-class estates in Nairobi. A sample size of 504 respondents was used for the study. Structured questionnaires were used to collect primary data and a document analysis guide was used to collect secondary data which was then analysed using descriptive statistics, linear regression and correlation analysis. The results revealed that customer loyalty (R-square change = .028 had a p-value = .005) has a positive mediating effect on the relationship between product differentiation strategies and the performance of the selected edible oils manufacturing firms in Kenya.