Foreign Direct Investment (FDI) has emerged as a major catalyst for accelerating the economic growth of developing nations over the years. This is because it is believed to be an important source of capital inflows and a major source of technology transfers to the host countries, especially developing ones like Nigeria. FDI has emerged as an integral part of an open and effective international economic system and a major catalyst for development. This research attempts to study the effects of FDI on the political economy of Nigeria in all ramifications, because FDI impacts not only economic indices alone; but affects the entire political economic fabric of the nation. The study used content analysis, contextual analysis and descriptive research, backed up with empirical secondary data of FDI inflows and value added to the Nigerian economy. The study discovered that while there are positive effects of FDI inflows into the Nigerian political economic system; like enhanced GDP contribution, improved infrastructure and public sector development, reduced unemployment and governance improvements; there are some negative impacts like undue foreign influence on domestic policy, corruption, political manipulation and unfair exploitation of natural resources. The study concluded that while FDI contributes to Nigeria’s economic and political development, it also raises challenges related to foreign influence, corruption, and resource exploitation and recommended that to maximise the benefits of FDI, Nigeria must implement strong governance and transparency policies that balance foreign interests with national priorities.