This study examines the efficacy of monetary policy in achieving Balance of Payments stability in Nigeria. One of the stabilization policies with which the government of Nigeria manages the economy is that of Monetary Policy. Monetary Policy formulation in Nigeria is usually targeted at achieving some macro-economic objectives amongst which is equilibrium in the country’s Balance of Payments (BOP). The general objective of this research was to examine the relationship between the Balance of Payments position in Nigeria and monetary policy adopted in the country. The research was conducted using an Ordinary Least Squares (OLS) technique of multiple regression models using statistical time series data from 1980-2010. The estimated result shows a positive relationship between the dependent variable (Balance of Payments) and the Independent variables (Money Supply, Exchange Rate and Interest Rate). Specifically, Money Supply and Interest Rate had significant relationship with Balance of Payments, whereas Exchange Rate was not statistically significant. Based on the results, it was therefore recommended that the government should promote the exportation of Nigerian products especially the Non oil products, as this will bring in more foreign exchange into the country, boost productive activities and improve the balance of payments position of the country. Also, the Central Bank of Nigeria should ensure that the monetary policies adopted in the country are complemented with effective fiscal policies to foster economic growth and development in the Nigerian economy.