Fiscal federalism has occupied the front burner of political discourse in Nigeria, since the return to civilian rule. The oil producing states of Niger delta region have been very vocal in their agitations for restructuring of the parameters for sharing the wealth of the nation which is located within their domain. Other southern states joined the agitations for resource control, which is believed would make more resources available to the various states to ensure development. The agitations have arisen because a larger portion of the national wealth is allocated to the federal government at the detriment of the oil producing states. The paper examined the genesis of fiscal centralization and decentralization. It also explored the various arguments for and against the two positions; the politics that underscore these positions as well as the various suggestions proffered to resolve the quagmire. We argue that while the framework for resolving the contentious issues have been laid, no meaningful attempt has been made by the federal government to effect change in the status quo. There has not been any constitutional amendment to the operations of Nigeria’s federalism with the federal government seeing it as a non-negotiable area. The agitations for resource control will continue as long as the federal government does not allow for sufficient economic empowerment to guarantee auto-centric development in the component units. The federal government should take urgent steps to ensure true fiscal federalism in the country.