This study examined empirically the impact of inflationary rate on the level of investment in a developing economy a case study of Nigerian Economy 1970-2008. The study adopted co-integration and error correction model as the estimating techniques. The empirical results showed that there is a long run relationship between inflationary rate and investment in Nigeria. Unlike some developed nations where inflation has direct relationship with the investment, in Nigeria, low rate of inflation and increased national income would promote investment. The policy recommendation is that Nigeria government should strive to curtail inflation to the minimum while accelerating the growth of the national income in her quest to boost investment.