Before the deregulation of interest rates in Nigeria, the interest rate was strictly controlled by the Central Bank of Nigeria (CBN). It was later realized that strictly regulated interest rate strategy could not sustain banks profitability in the country. The study therefore seeks to empirically examine the effect of Interest Rates Deregulation on the performance of Deposit Money Banks in Nigeria between 1986 and 2014 using OLS regression method. Unit root test was employed to ascertain the stationary levels of the variables before conducting the regression analysis. Findings from the study revealed that deregulated interest rates have positive and significant impact on the ROA of deposit money banks. It showed that as interest rates increase, the ROA also appreciates. The study further revealed that deregulated interest rates have positive and significant relationship with the loans and advances of deposit money banks. It shows that the higher the rates of interests, the higher the performance of deposit money banks. It was therefore recommended that the banking sector regulatory authority needs to ensure that specific policy tools such as the minimum re-discount rate, maximum lending rate, liquidity ratio, monetary policy rate are effectively managed to induce higher savings, increase credit supply, stimulate investment and hence positively impact on the performance of the banking sector and enhance economic growth in general