The financial difficulties faced by many developing countries causes retardation to economic development and standardized well-being of their citizens. One major sector of every developing economy that should have contributed immensely to their revenue generation drive is the informal sector given its enormous size. The effect of informal economy on generation of tax revenue in Nigeria was examined in this paper. It was a field survey research design, 73 structured questionnaires were administered to the sampled respondents while 68 were retrieved representing 97.1% retrieved/completed usable copies. Cronbach Alpha test shows that the research instrument has a value of 0.988 which is greater than 0.70, which implies that the research instrument is reliable. The study adopted purposive sampling technique for sample size estimation of descriptive and inferential statistics employing regression analysis were used for data analysis. The findings revealed that informal sector (tax assessment and collection technique, tax compliance level, informal sector financial acquisition and economic activities of informal sector) significantly affected revenue generation through tax in Nigeria (Adj.R 2= 0.935, F(63,4)=241.364, p< 0.05); The study concluded that informal sector significantly influence revenue generation through tax in Nigeria. Therefore, this paper recommended that Nigerian government should boost the tax assessment and collection technique of informal sector in order to increase revenue and also give room for tax incentive given to the sector to allow for more informal business to be registered with the CAC