ABSTRACT: Education plays a very crucial role in promoting democracy, good governance and national development in Nigeria and beyond. The cardinal point is in its emphasis in inculcating the right types of values to the citizens, thereby improving the social wellbeing of the people and the enthronement of strict adherence to the rule of law as a culture in the society. Nations of the world today, rightly or wrongly, freely or by compulsion, wants to be seen as democratic even though the political system does not have any similitude of a democracy. Democracy today, as a system of governance is been clamored for all over the world, makes it seem as the fashionable system of good governance that must be internalized. Based on this therefore, this paper critically examines the challenges and prospects of education, democracy and National development in Nigeria. It argues that challenges like examination misconduct, under-funding, policy somersault, political instability and electoral malpractices in Nigeria and systemic corruption are the major challenges to the institutionalization of democracy as an instrument of national development in Nigeria. In the same vein, the paper states that, an enlightened society through education, the independence of the electoral umpire INEC, impartial enforcement of anti-corruption laws and enthronement of internal democracy in political parties will enhance the prospects of education, democracy and national development in Nigeria.