In the present study physicochemical parameters like pH, hardness, TDS, chloride, sulphate, nitrate, fluoride, DO, COD and conductivity of some important heavy metals such as iron, cobalt, cadmium, lead, mercury, chromium, selenium and arsenic were first analyzed in effluent water of Okhla industrial area phase-II and then groundwater of near by areas. Obtained values of effluent water were compared with ISI standard for effluent water discharge and groundwater values were compared with ISI and WHO drinking water standards. The result shows that discharge of untreated effluents by the industries is leading to contamination of groundwater of the surrounding areas. Lead, mercury, fluoride, TDS, sulphate was above the desirable limit in effluent water (ISI standard for effluent water discharge). Subsequent analysis of groundwater of nearby areas was rated as unacceptable for drinking because of presence of fluoride in all the samples above the desirable limit. Lead, mercury, cadmium, chloride was also detected in many samples.