This paper explores the linear or nonlinear (asymmetric) impact of domestic debt outstanding on economic growth in Nigeria over the period of 1981 to 2021 using linear and nonlinear Autoregressive Distributed-Lag (ARDL) models. This studys data is mainly collected from secondary sources including World Development Indicators (WDI) and Central Bank of Nigeria (CBN). The findings of this study reveal a negative and insignificant linear relationship between domestic bank holding debt (DOBH) and economic growth in the long run and short run while domestic non-bank holding debt (DNBH) has positive impact on economic growth in the short run and a nonlinear (asymmetric) impact in the long run. Therefore, the study recommends that to increase growth, government should initiate policy that will stop commercial banks from holding excessive government bonds so that more loanable fund is available for private sector to invest in real sector and also encourage itself (as a larger spender) to hold more non-bank debt and invest in infrastructures that will encourage investment expansion and economic growth.