In this study effort has been made to discuss the impact of oil revenue on the economy of Nigeria between 19 85 and 1994. Extensive Library Research is adopted in studying the problem. 1908 marked the attempt of exploration for petroleum in Nigeria, while the modern search for oil in the country began in 1937 and exportation started in 1958. The exploration and production were found to be exclusively under foreign control for some time before the intervention by the Nigerian government. The study revealed that oil revenue and the government revenue are symmetrically correlated having applied correlation analysis. Thus oil gives the Federal Government command over a considerable amount of resources. The work equally revealed that inspite of the huge revenue derived from the oil industry, Nigeria is yet to witness the desired transformation of her economy due to avoidable factors. It has been suggested that vigorous diversification of the economy should be pursued rather than overdependence on the revenue from oil. Lastly, based on the potentials of Nigeria's reserves, the paper revealed that the future of oil industry is bright in the country if we get our priority right.