The aim of this paper is to examine the relationship between capital structure and financial performance of firms listed in the Nigerian stock exchange between 2012 and 2017. Data were extracted from 40 companies out of 169 companies which are listed on the Nigerian Stock Exchange as at 2018. Consequently, ordinary pooled least square was adopted to analyze the objective of study. The principal findings that originate from this study is that capital structure has a negative impact on return on equity and return on asset of the firm listed on the Nigerian stock exchange. In view of the above important findings that originated in this work, it is paramount that the following recommendations are made for the investors and the policy makers in Nigeria that debt capital is not a profitable means of financing investment projects in firms listed in the Nigerian stock exchange. However, all hands must be on deck by the Nigerian policy makers to embark on policy measure to reduce double digit interest rate in the financial sector in order to ensure self-liquidating debt capital in the listed firms in the Nigerian stock exchange.