This paper examines the impact of oil price movements on real output growth in Nigeria during the period 1970 to 2011 making use of annual time series data. The empirical analysis rests on dynamic VAR analytical framework. To capture the possible channels reflecting the fluctuations in the oil prices, the model includes money supply, real exchange rate, government spending and inflation. Our findings indicate the lagged effects of the VAR model are not able to capture any significant impact of changes in oil prices, and oil price shocks are therefore not found to contribute directly to output, exchange rate or inflation in the short run but show a positive significant relationship to output growth in the long run. Following the VAR model results, the generalized impulse responses reaffirm the direct link between the net oil price shock and growth, as well as the indirect linkages.