This study investigates the impact of public debt on economic growth in Nigeria, using the Debt Overhang Theory as a framework. The theory suggests that high debt levels can reduce growth by discouraging investment and causing fiscal strain. Quarterly data from 2007Q1 to 2024Q2 were sourced from the Debt Management Office (DMO), Central Bank of Nigeria (CBN), and National Bureau of Statistics (NBS). Real GDP (RGDP) was used to measure economic growth, while debt indicators included Multilateral Debt (MD), Bilateral Debt (BD), Commercial Debt (COMD), Banking Sector Debt (BSD), Non-Banking Sector Debt (NBD), and CBN Ways and Means Advances (CBNWM). Control variables were Exchange Rate (EXH), Inflation (INF), and Interest Rate (INT). An Augmented Dickey-Fuller (ADF) test confirmed all variables were stationary at first difference. Johansen cointegration test found five cointegrating relationships, indicating a stable long-term link. The long-run analysis of the vector error correction model (VECM) reveals that multilateral, bilateral, banking sector, non-banking sector debts, and Central Bank ways and means advances exert significant negative effects on economic growth, while exchange rate movements positively influence growth. The short-run results confirm a significant error correction mechanism, indicating gradual adjustment toward long run equilibrium, with debt variables and inflation also playing notable roles in short-term GDP fluctuations. Also, Granger causality tests revealed predictive relationships between debt and growth variables, and confirmed the interconnectedness of Nigeria’s debt system. The inverse roots of the AR polynomial confirmed model stability. The findings underscore the importance of prudent debt management and macroeconomic stability, suggesting that controlling inflation and exchange rate volatility alongside disciplined borrowing are essential for fostering sustainable economic growth. These insights provide valuable guidance for policymakers aiming to enhance economic performance through balanced fiscal and monetary strategies.