This research study investigates the impact of microfinance on poverty alleviation in Nigeria. The researchers used questionnaire as an instrument to collect data. Tables and percentage distribution analysis were used in data presentation. For clear analysis, the study center on two broad variables: poverty alleviation as the dependent variable and microfinance loan disbursement as the independent variable. Three different hypotheses were formulated and tested using various statistical tools such as chi-square test, F-test and T-test. The study reveals that (i) there is, a significant difference between those people who used microfinance institutions and those who do not use them; (ii) there is a significant effect of microfinance institutions in alleviating poverty by increasing income and changing economic status of those who patronize them and (iii) that there is a significant effect of microfinance activities in predicting sustainable development. The researchers conclude that microfinance institution is indeed a potent strategy of poverty reduction and a viable tool for surveying credit to the poor. However, microfinance can be more viable tool for sustainable poverty alleviation if more is done on programme outreach and depth than the present outreach.