The study investigated the effect of depreciation of naira on Nigeria economy, causes effect and remedy using time series analysis and annual data from 1990 – 2009. The regression analysis model were used to capture both the long-run and short-run dynamics of the variables in the model. The empirical results indicate that depreciation of naira have significant effect on economic growth. There also exists a unique long-run relationship between economic growth and its determinants, including exchange rate, inflation rate and interest rate. It is relevant that Nigeria as a nation should critically look at her economic policies and exchange rate regimes to curb the instability in the naira exchange rate as well as boost her external balance.