Nigeria’s economy has undergone periods of turbulence, influenced by factors like volatile oil prices, rising inflation, and fluctuations in the exchange rate. The focus of the study was to analyze the role of macroeconomic variables and institutional quality in attracting foreign direct investment in Nigeria from 1996 to 2023. Various econometric and statistical techniques were employed Considering the behavioral pattern of the variables used for estimation, this study adopted Autoregressive Distributed Lagged model (ARDL). The findings of the analysis show that the lagged values of FDI positively influence current FDI levels, the exchange rate (EXR)) has a negative and significant effect suggesting that past exchange rate values negatively impact FDI, Inflation (INF) and interest rate (INT) coefficients are not statistically significant, indicating they do not have a strong direct influence on FDI, Institutional quality (IQ) shows a mixed impact, with the current value, and its lagged value approaching significance but not quite reaching it. In the light of the findings and analysis of this research, the researcher recommends that given the negative and significant impact of exchange rate on FDI, policymakers should prioritize stabilizing the exchange rate. This can be achieved through prudent monetary and fiscal policies, as well as interventions in the foreign exchange market when necessary. Stabilizing the exchange rate will reduce investment uncertainty and create a more conducive environment for foreign investors.