Illicit Financial Flow is a global phenomenon that effect both developing and developed nations. Its adverse effect is devastating to the economy of developing nations or third world countries. The work adopted dependency theory and structuralist theory of development as its theoretical framework and made use of secondary data and content analysis for its discussion. The study identified the factors responsible for high illicit financial flows in and out of Nigeria which include poor policy formulation and implementation, lack of political will, poor institutional framework and our legal system. The channels of illicit financial flows were listed. The impacts of illicit financial flow were discussed, its leads to financial drains, low revenue on foreign reserve, destruction of natural environment, leads to inflation, unemployment, dependency, etc, The relationship between illicit financial flow and underdevelopment ex-rayed, it was revealed that there is a nexus between the two concepts. If the huge sum of money lost through illicit financial flow are invested in Nigerian development could have been achieved considering the resources available in the nation. The study made recommendations on how illicit financial flow can be drastically reduced which include, proper and restructured institutional framework, [ legal, financial and administrative framework,] strong anti-graft agency, collaboration with neighboring states, sensitization and orientation, confiscation of illicit wealth by government, persecution of culprits.