Abstract The role of foreign direct investment in promoting growth and diversification cannot be overemphasized. Yet how it responds to fiscal policy remain contested across countries. Extant literatures showed mixed result, with some emphasizing the effectiveness of government spending and taxation and others highlights the much influence of weak institutions. Nigeria’s case presents a unique concerns where fiscal incentives have been majorly used still institutional quality continues to undermine fiscal policy creditability. This study investigates the relationship between fiscal policy and FDI in the context of Nigeria with institutional quality serving as the moderating factor 1990 – 2024. The study made use of Autoregressive distributed lag ADRL approach to capture both short and long run dynamics. The results indicated that government expenditure and tax revenue significantly increase FDI inflows, conversely inflation, interest rate and exchange rate exert negative effects. Institutional quality showed a positive impact on FDI and in addition increase the effectiveness of fiscal policy through significant interactions terms. The findings from this study underscore the importance of government reforms in bolstering fiscal measure which are aimed at attracting sustainable investment. This study concludes that incentives from fiscal alone iare not sufficient without credible institutional quality frameworks and further recommends that as a country, Nigeria should deepens rule of law enforcement, improve transparency in fiscal allocations and align policy design with institutional improvement to maximize FDI gains.