In this paper, we present a domain decomposition method for solving singularly perturbed differential-difference equation with a small negative shift and the boundary layer at left end of the under lying interval. The method is distinguished by the following fact: The original singularly perturbed boundary value problem is divided into two problems, namely inner region problem and outer region problem. The boundary condition at the cutting point is obtained from the theory of singular perturbations. Using stretching transformation, a modified inner region problem is constructed and is solved by using the upwind finite difference scheme. The outer region problem is solved by a Taylor polynomial approach. We combine the solutions of both the problems to obtain an approximate solution to the original problem. The proposed method is iterative on the cutting point. The process is to be repeated for various choices of the cutting point, until the solution profiles stabilize. A lower bound for the cutting point of the boundary layer region is obtained in terms of the perturbation parameter and delay parameter. The method is analyzed for stability and convergence. Some numerical examples have been solved to demonstrate the applicability of the method. © Euro Journals Publishing, Inc. 2012.