This study was carried out to ascertain the impact of foreign direct investment on economic development in Nigeria between 1981 and 2018. Data employed for this study was elicited from World Bank Data Base-World Developmental Indicators of 2018 and Central Bank of Nigeria Statistical Bulletin of 2018. This study employed gross fixed capital formation as proxy for economic development in Nigeria, and exchange rate was employed as a controlled variable while data on foreign direct investment inflow to Nigeria was adopted as the explanatory variable. This study employed Auto Regressive Distributed Lag (ARDL) Model to analyze data; other diagnostic tests such as: stability test, Auto correlation test, Heteroskedasticity test and Breusch-Godfrey Serial Correlation LM test were also carried out and they confirmed the validity and reliability of the model employed. The inferential results pointed out that foreign direct investment impacted positively but insignificantly on economic development in Nigeria between 1981 and 2018. These results also conform to apriori economic expectations. The study recommended that government of Nigeria should provide enabling environment that will be conducive for doing business, so as to attract additional inflow of foreign direct investment. Government can provide enabling business environment by provision of steady supply of electricity and ameliorating or exterminating insurgent activities in the country and restore confidence of investors to come into Nigeria and invest, when this is done, the volume of foreign direct investment into Nigeria would increase and would enhance exports thereby reducing exchange rate.