Abstract: Nigeria, Africa's most populous country, has historically been a recipient of foreign aid; in 2023 alone, it received more than $4 billion in official development assistance. This influx of foreign aid is intended to support the Nigerian Government's efforts to address significant socio-economic issues such as poverty, inadequate healthcare, and labor shortages. However, despite this influx, Nigeria continues to struggle with political and socio-economic problems. This has led to an ongoing debate among academics about the actual impact of international aid on the country's development trajectory. At the heart of this debate is the complex relationship between the dynamics of foreign aid and Nigeria's political economy. Political factors also influence the policy and use of foreign aid, disproportionately benefiting some regions compared to others. Corruption and poor governance prevent aid from being directed towards profitable investments, limiting its economic benefits in Nigeria. This study examines how foreign aid affects Nigeria's development through case studies, a theoretical framework, and a literature review. The political economy approach emphasizes the interaction of political, economic, and social elements in determining development outcomes. The novelty of the study also lies in the synthesis of existing literature with in-depth practical research to demonstrate the intricacies of providing assistance in the Nigerian context. By linking theoretical foundations such as institutional theory with real-world examples such as the Subsidy Reinvestment and Empowerment Program (SURE-P) and the Millennium Development Goals (MDGs), the study provides a comprehensive analysis of aid management, accountability, and sustainability issues. The results of this study highlight the need to strengthen institutional frameworks, improve data collection and monitoring systems, and promote collaboration between government, civil society, and foreign donors to increase aid transparency and accountability. Ultimately, this study provides valuable information for policy makers and development professionals seeking to maximize the impact of foreign aid on Nigeria's sustainable development.