A method and system for monitoring performance of network transactions is described herein. According to the present invention, in a testing environment, transaction flow signatures representing a hierarchical flow of sub-transactions constituting the said network transactions are generated and stored for monitoring and analysis of the network transactions. In a real-time environment, the sub-transactions are identified through the stored transaction flow signatures for a particular network transaction and the identified sub-transactions are then monitored by metrics analysis engine to determine the performance of the network.