This study used systematic time series econometrics approach to analyse the effect of external reserve (ER) on macroeconomic indicator proxy by real gross domestic product (RGDP) during the period 1981-2019. The study made use of secondary data from Central Bank Nigeria (CBN) Statistical Bulletin and adopted Ordinary Least Square (OLS) technique of analysis. The result of the finding revealed that economically, independent variable did not conform to a priori expectation. Statistically, both individual and overall results revealed that external reserve has statistical significant effect on real gross domestic product in Nigeria. Therefore, the researchers recommend that government should not wholly depend on crude oil exportation for foreign earnings rather they should diversify the economic base of the country like industrialization and improvement in agricultural sector. These will boost the foreign earnings as exportation of domestic goods is encouraged. More so, there should be a statutory check on mismanagement of foreign refunds by government officials.