Nigerian universities are facing serious challenges so much that their essence and philosophy as a centre of excellence for the production of graduates that will not just meet the national goals but can compete globally is threatened. Inadequate infrastructures, obsolete learning and teaching equipments, have been traced to the issue of underfunding of universities. The problem of student population explosion without commensurate expansion in facilities and teaching staff, defective academic curriculum are issues that the Nigerian university system has been grappling with over the years. This study attempts to assess the Institutional Capacity and Quality of Education in Ahmadu Bello University and University of Ibadan in Quality Service Delivery of funding academic staff and the nature of academic curriculum of Ahmadu Bello University and University of Ibadan in service delivery. Data were collected through the primary and secondary sources.The primary sources consist of questionnaire and interview. Questionnaires were administered to the academic and management staff while interview were conducted on the management staff to complement research questionnaires. The secondary source explored include journal publications from National University Commission, Central Bank of Nigeria Bulletins, published academic journals ABU and UI websites. Descriptive and inferential statistical tools of frequency counts, simple percentage, and means were used for the analysis while the hypotheses were tested using the chi-square. Consequently, the study discovered inadequate budgetary allocation coupled with untimely release of subventions and grants, shortage of qualified academic staff and defective curriculum contents as the bane to quality service delivery of the universities. The study concludes that government budgetary allocation and subventions for infrastructural development to the universities be improved upon and be timely released. The regulatory agency should embark on the critical path of further revising the curriculums of Nigerian universities to make them more responsive to national needs and global relevance through the development of a more realistic academic standard for students in the university before they are turned out.