This paper involves a description of the situation of gang violence in Brazil Rio de Janeiro Favelas. It also analyzes the growth of Favelas since 1980’s with a link to the debt crisis, economic transition and neo-liberalism reforms which have taken place in Brazil since then. The paper also brings forward the factors that have contributed to the rise of gang violence in Favelas. It also involves a research on the response of the government to the gang violence. Additionally, it brings forward the issues that have risen as a result of failure within government institutions. Such failures include instability and lack of democracy in these government institutions. These failures have made it hard to deal with the gang violence in the Favelas. This paper also proposes policies to be put in place to ensure that gang violence in Favelas is eradicated as a way of ensuring safe living in the shanty town (Perlman, 2009). Favelas is one of the largest slum areas in Rio de Janeiro Brazil. The slum area has a population of about one million people which is 20% of the Rio de Janeiro population (Vanden & Gary, 2011). The inhabitants are mainly low income earners and job seekers who are new migrants into the city. There has been growing violence in the slum area which has largely been contributed by drug dealers. The dealers have turned for refuge in the slums since they see the area as a safer place without government interruptions. The gangs recruit the slum dwellers into the drug business where they use them as sales and delivery men. The violence has risen as these rival drug dealers gangs fight for control over the area. The violence has also resulted from the government forces, mainly the police, as they fight the drug dealers a situation which results into shoot outs between the two groups. Gang violence in Rio Favelas is growing day by day. Since the period of 1980-1990 to today, Favelas has grown to be one of the major insecure places in Rio de Janeiro. This has been on the increase due to the increase in population and lack of employment mainly among the youths. The control of the area has mainly been by the drug cartels that use the area as a centre for business where their shipments are received. The rival drug cartels engage in shoot outs where they leave many innocent residents dead and their homes destroyed. The gangs control the police in the area in such a way that, the police have become corrupt because of their low pay and they receive bribes from the drug dealers to let them do their business freely. The other government forces have not solved the violence caused by the drug dealers. When the forces get into Favelas, they are in a mission to fight with drug dealers, but they end up killing and shooting innocent residents going about their daily businesses. According to Perlman (2009), the reason behind the gang violence can be attributed to what he calls ingredients. The area has been discriminated by government agencies in that, there is no protection offered by the government in form of security. The discrimination is evident in the fact that, it took a series of decades for the Favelas to be included in the city maps. The residents have been subject to police harassment and mistreatment because they are treat