Nigeria's disparate ethnic structure and their patterns of interaction stimulate increasing scholarly interest. To classify this historic cumulative phenomenon and attenuate the vagary of emerging fissures and mistrust arising from ethnic tension, has been daunting with recourse to a myriad issues associated with ethnic action set and orientation namely ethnic agitation, violence , overt intra and inter- ethnic dissonance which pose challenges to socio-economic development of Nigeria. This paper identifies and discusses the variants of ethnicity in Nigeria. It contends that an orientation towards a theoretical review of the variants of ethnicity in Nigeria is important to understand the persistent challenges ethnic politics pose to democracy transformation in Nigeria. Although these variants suggest that it is increasingly difficult to disentangle ethic politics in the socio-political and economic life of Nigeria. Ethnic transformation is not ineluctable. From the political economy framework, the article argues that the ethnic behavior is mediated by dynamics of access to, and control of material resources, hegemonic power play and inclination that represents interwoven contests of meaning regarding the criteria of ethnic artifact's exchangeability, interaction and relationship that perpetuates ethnic strife, mistrust and intolerance among contending and competing disparate ethnic groups in Nigeria. In exploring the ethnic action set and relationship, the article is able to bring a finer degree of analysis of the variants of ethnicity in Nigeria and how they connect to the broader political economy of Nigeria.