Contingency analysis is the study of the outage of elements such as transmission lines, transformers and generators, and investigation of the resulting effects on line power flows and bus voltages of the remaining system. This paper presents the simulation of a contingency analysis of IEEE-6 Bus power system using PSAT in Matlab toolbox. The contingency analysis for the given IEEE-6 Bus system for line 3-4 outage is carried out. Simulation of line outage is more complex than a generator outage, since line outage results in a change in system configurations.