In this study, the structural change and its impact on the productivity of Turkish service sector is explored. In the study, using structural decomposition analysis, the sources of the increase in the productivity of service sector have been determined. In the analysis, the industry and service statistics data at NACE. Rev. 2 level obtained from TURKSTAT covering the years 2003-2012 was used. Our findings show that productivity in the service sector of Turkey decreased significantly in 2003-2012 period. The effect of structural change on total labour productivity turned out to be positive especially for the periods of 2003-2008. The intrasector effect was calculated to be negative and very high for all three periods. In conclusion, the findings of this study imply that Turkish service sector's productivity growth has not been able to benefit from the structural change sufficiently.