The present study was planned to investigate the pathology of terminal ileum and associated lymph nodes in Gaddi sheep in Himachal Pradesh (HP) with particular emphasis on paratuberculosis. The tissue samples were collected from 39 sheep slaughtered for table purpose around Palampur and from Government slaughter house Shimla, Himachal Pradesh, during September, 2013 to March, 2014. The terminal ileum, along with ileo-caecal junction (ICJ) and associated lymph nodes were critically examined at gross and histopathology for lesions suggestive of paratuberculosis. The scrapping smear cytology of ileal mucosa and ileo-caecal lymph node (ICLN) was stained by Ziehl-Neelsen’s (ZN) staining. Based on gross pathology, a total of 25(64.10%), 3(7.69%) and 1(2.56%) cases showed lesions suggestive of mild, moderate and severe paratuberculosis, respectively, with an overall 74.36% cases. ZN stained cytology demonstrated acid-fast bacilli (AFB) in 9 (23.08%) cases. On routine histopathological examination, the tissue samples were graded from 0 to IV and revealed only one (2.56%), 21 (53.84%), 13 (33.33%) and 3 (7.69%) Grade I, II, III and IV cases respectively, with an overall 97.43% cases. Only one histopathological Grade III case showed AFB (paucibacillary type) in ZN stained tissue sections from ileum and ileo-caecal lymph node (ICLN). Irrespective of the grade of paratuberculosis lesion the lymph nodes revealed mild to severe fibrosis in most of the cases suggesting replacement of granulomatous areas. In conclusion, histopathological examination was found to be the most effective method for detection of paratuberculosis in sheep and the present study suggests alarming level of paratuberculosis among Gaddi sheep in HP.