Terrorism in whatever dimension poses threat and insecurities to human existence in regards to which defenseless nations live in perpetual fears and anxiety. Knowing full well that Security is presently a major challenge in Nigeria and Nigerians are killed on daily basis and in their numbers. Though the government claims to be on top of the situation, the problem persists. The effects of these acts of terrorism are the threats they posed to national security, peace, unity and development of the country. This paper examines Terrorism and the Challenge of National Development, rethinking the Nigerian Dilemma. It provides a basic discourse on the concept of terrorism and national development while focusing on basic issues such on the development perspective. It also analyzes the implications of terrorism which range from economic crises to political instability. This paper observes that there is a negative relationship between terrorism and development in accordance with literature and hence recommends that the government should take the business of addressing issues of terrorism as priority one on the agenda.