The development challenges of Nigeria’s oil-rich region – the Niger Delta – have remained palpable. It has also necessitated many debates from different ideological perspectives. The much attention received stems from the fact that the Niger Delta is a region blessed (cursed) with huge human and natural resources, but has remained perpetually poor. That is the basis for the now-cacophonic paradox in the region: wealthiest but penurious. Many reasons have been adduced for the existence of this paradox but very little attention has been given to the impacts of the character of Nigerian post-colonial state on the development issues of the region. It is against this backdrop that this paper attempted an investigation into the relationship between the nature of Nigerian state, its form of federalism and the demonstrable development challenges of the Niger Delta. In conducting this investigation, Marxian Political Economy Approach was adopted as the theoretical framework in order to historicise the emergence of Nigerian post-colonial state with a view to ascertaining the factors responsible for its characterisation as deformed-capitalist. As a largely desk study, data were mainly obtained from secondary sources which included such documents as journals, textbooks and articles in addition to internet resource materials. Content analysis of the data revealed that the deformed-capitalist nature of Nigerian post-colonial state partly manifests in its distorted federalism which has furthered the development of underdevelopment in the Niger Delta. The paper therefore recommended the restructuring of Nigeria’s federal system, tantamount to the implementation of real fiscal federal principles which are instrumental to the development of federations like United States of America and states like Alaska. In other words, resource control was highly advocated.