This paper deals with the issue or act of condemning Muslims as unbelievers and its negative effects on the socio- economic life of the Muslims in Nigeria. The Prophet [SAW] has condemned the act of Takfir in strongest term. It was found that the usage of the word kafir in the Qur‟an and Hadith sometimes does not mean an unbeliever, as there is kufr of lesser degree which does not take a Muslim out of Islam if he commits it. The paper also found that Muslims sects share differences on the issue of Takfir. It was also found that there was Takfir in Nigeria long before the period of the Jihad leaders and also during their period. The study also found that there are many causes for the Takfir in Nigeria. These include secularism, partisans of politics, role of some scholars, among others.