This work sets out to examine the relationship between the Nigerian Capital Market and economic development of Nigeria from 1987 to 2006. Thus, the performance of the Nigerian Capital Market indicators as they affect the GDP growth rate and human development index in Nigeria was examined. Multiple linear regression model was adopted as the method of analysis. The evaluation technique includes t-statistics, R squared, adjusted R squared, Durbin Watson test, standard error test and the f-statistics. The specific findings of this study show that there is no significant relationship between the capital market indicators and economic development in Nigeria during the period 1987 to 2006. There is a positive but insignificant relationship among the Nigerian Stock Exchange market capitalization, turnover ratio and economic development, while the relationship between the Nigerian Stock Exchange number of listed securities and economic development is negative and insignificant. Therefore, the Nigerian capital Market has fallen short of expectation vis-à-vis its role in fostering investment for economic growth and development.