The study evaluated the Vector Error Correction analysis of foreign direct (FDI) investment and its effect on the performance of Nigerian economy; for the period 1990-2018. Secondary data were used and collected from Central Bank of Nigeria Statistical Bulletin. The study used Gross Domestic Product as the dependent variable to measure economic performance; whereas, Exchange Rate, Foreign Direct Investment and Inflation Rate respectively were employed as the explanatory variables. The result confirmed that about 78% short-run adjustment speed from long-run disequilibrium. The study revealed that foreign direct investment had a significant effect on Gross Domestic Product in Nigeria. Exchange rate was positive; but had an insignificant effect on Gross Domestic Product in Nigeria. Inflation rate had an insignificant effect on Gross Domestic Product. The coefficient of determination indicated that about 64% of the variations in economic growth can be explained by changes in foreign direct investment variables in Nigeria. The study concluded that foreign direct investment had significantly affected the growth and development of the Nigerian economy. The study recommended that the Government and policy makers should provide adequate infrastructure and policy framework that will be conducive for doing business in Nigeria, so as to attract inflow of FDI. The policy makers and government should formulate policies that will be favorable to local investors in order to complement the inflow of investments from abroad. Government should improve the investment climate in order to encourage domestic and foreign investors through infrastructure development.