The study analyzed the effect of the fluctuation in the crude oil price on some key macroeconomic variables in Nigeria. Using the autoregressive distributed lagged model (ARDL), the study shows that there is no cointegration relationship in any direction between the oil price and each of output, interest rate, inflation rate, unemployment rate, and exchange rate. There is however, a unidirectional cointegration running from oil price to each of money supply (M2) and government expenditure. The results of a vector autoregression (VAR) estimation reveals that there is no causality between the oil price and each of the output, interest rate, inflation rate, unemployment rate, and exchange rate. A vector error correction (VEC) estimation shows that the causality between the oil price and each of the money supply and government expenditure is in one direction, from the oil price to each of the two variables. The orthogonalized impulse response functions (IRFs), cumulative orthogonalized IRFs, and forecast error variance decomposition (FEVD) estimations, all confirm that each of the output, interest rate, inflation rate, unemployment rate, and exchange rate is unresponsive to shocks in oil price; while shocks in oil price has a permanent effect on each of the money supply and government expenditure. The study therefore, concludes that Nigeria has not used the huge revenue realized from its oil and gas sector during the period of oil windfalls and rising oil prices to grow its economy. Also, it is found out that inflation in Nigeria is a monetary phenomenon as a response of the domestic price levels to the increase in money supply, which responds positively to the increase in oil revenue over the years. It is therefore suggested that Nigeria needs to diversify its economy and sources of revenue; maintain prudent fiscal management and fiscal discipline; make the governmental institutions, agencies and parastatals more transparent at all tiers of government, and curb corruption and financial misappropriation, especially in the oil and gas sector of the economy.