There is ample evidence that Nigeria’s federal system faces major operational and institutional difficulties. However, this paper examined the difficulties bedeviling the Nigeria’s federal system. In building the body of the work, the paper employed qualitative method in collating information and thepaper followed the assumptions and postulations of the classical model of federalism which is associated with Kenneth Wheare. In plural societies the theory posits, federalism is about equality and equity, justice and fairness amongst both the constituent units. But conversely, this paper found out that the political economy of federalism in Nigeria is bedeviled with over concentration of power at the center, resource control and sharing formula crisis, the insincerity of the federal government and sectional domination of power in the federal system. Therefore, the consequences of these anti–federalist arrangement are:clamor for restructuring, continue agitation for secession by some aggrieved groups and threatened national unity and development. The paper however, recommended among others that, all remnants of the unitary system of government should be eradicated, and the states should be given the freedom and autonomy that is consistent with federalism. Also, the law that vested all mineral resources under the soil of Nigeria with the federal government should be reviewed. And finally, government especially at federal level must be sincere, honest, transparent and accountable to her citizens. Keywords: Federalism, Restructuring, Politics, Economy..