Capital formation is one of the major determinants of economic growth. Literature is replete with the extent to which capital formation can engineer the growth of nations. There is a conventional perception that the most pertinent obstacle to economic growth is shortage of capital. This work analyses capital formation and its impact on the Nigerian economy. The work studies the extent to which capital formation effects economic growth in Nigeria. Making use of the classical linear regression model (CLRM) through the ordinary least square (OLS) method, the impact of capital formation on the Nigeria’s economic growth was examined. The result showed that capital formation has a significant impact on economic growth. The work goes further to analyse the determinants of capital formation in Nigeria as understanding these determinants is a crucial prerequisite in designing a number of policy interventions towards achieving economic growth. This is important because the level of impact of capital formation on economic growth depends on the intensity of its determinants. The result showed that the significant determinants of capital formation in Nigeria are the level of financial development (proxied by the market capitalization of the Nigerian Stock exchange) and gross domestic product (GDP).The work also makes some important policy recommendations.