This study examines the impact of stock market development on capital formation and growth in Nigeria. The main objective is to determine the relationship between gross fixed capital formations and other independent variables like market capitalization, new issues of instruments, gross domestic product and industrial production index that determine capital formation. Time series data obtained from Central Bank of Nigeria (CBN) and Nigerian Stock exchange (NSE) for the period 1981 to 2009 were analyzed using Ordinary Least Square (OLS) analysis. The result of the regression analysis shows that a positive and significant relationship exists between gross fixed capital formation and gross domestic product as well as industrial production index. However, there is an inverse relationship between gross fixed capital formation and market capitalization as well as new issues of instruments; this indicates that the Nigerian Stock Market in its many years of existence has contributed marginally to long-term capital formation in Nigeria. This study concludes with a number of recommendations and suggestions all tailored toward how the stock market regulators and policy makers can improve the effectiveness and efficiency of the Nigerian stock market in the area of long-term capital formation and real-sector financing geared toward the growth of the economy.