The proliferation of alcohol outlets has led to increased physical availability of alcohol, harmful alcohol consumption and related harm in Nigeria. This study explored alcohol licensing legislations and licensing systems across local government councils (LGC) in South-West, Nigeria. Twenty-four LGCs across three states participated in the study. Data were generated from: (i) documents containing LGC liquor licensing legislations; and (ii) semi-structured interviews conducted with 50 LGC officials (16 legislative council clerks and 34 finance officers [director of finance, rate officers and revenue collectors]) were thematically analysed using NVivo. Nine of the sampled LGC enacted liquor licence bylaws. These mostly specified categories of liquor licences issued and licensing fees. None of the liquor licence bylaw contained regulations for controlling physical availability of alcohol and outlet density. Finance officials were licensing officers and there were no licensing committees across the LGCs. The LGC officials were unanimous in stating that generating revenue from licensing fees was the main objective for licensing alcohol outlets. The LGCs licensed alcohol outlets indiscriminately and failed to regulate outlet density. The absence of regulations for controlling outlet density has implications for physical availability of alcohol in Nigeria. Our findings strongly suggest the need to develop national liquor licensing legislation with public health objectives and implementing regulations for controlling temporal and spatial availability of alcohol. Each LGC should inaugurate a licensing committee with clearly defined roles and responsibilities for licensing stakeholders such as LGC health officials, law enforcement agencies and community members.