The protracted economic crisis that plaque Nigeria since the early 1980s has impacted negatively on the well-being of youth in the country. The situation is further exacerbated by the high incidence of state failure and the crisis of governance, characterised by the massive deterioration of government institutions, pervasive poverty, corruption and the near total collapse of moral and ethical standards in the country. This has occasioned the worsening and continued deterioration of the socio-economic condition of youth thereby, creating a myriad of problems ranging from poverty, unemployment, drug and substance abuse, family disintegration, crime, violence, frustration and despair. While several attempts have been made to solve youth problems in Nigeria, the outcomes of these initiatives have been sub-optimal, as most existing policies designed to empower youth are borne out of ‘moral panicky’ measures, rather than being genuinely geared towards solving the problem. These policies emanate more out of fear of the negative consequences of youth responses to their poor situation, than in fundamentally addressing the factors responsible for the situation. The good governance option thus, becomes imperative; owing to the prominence it accords structures and processes in achieving outcomes. Its propensity to generate trust and reciprocity in the exercise of authority facilitates order, stability and continuity in state-society interaction that in turn guarantees the sustainability of these outcomes in the long-run. Utilizing secondary data, the study examines the nature and causes of the deteriorating conditions of youth socio-economic situation in Nigeria. It also explores the option of good governance as a panacea, with particular emphasis on active youth participation in policy initiatives, accountability, transparency and effective service delivery.