In the last two decades, intra-racial tensions and conflict with ethnic undertones have littered the political landscape of Nigeria which has resulted into blood-shedding and the greatest human and material destruction. The menaces of inter-racial conflict and pervasive ethnic hostilities in different parts of the country have posed serious threats to the survival of the Nigerian State. This could be seen in the crises between the Biroms, Anagutas, Afizeres and the Hausa-Fulanis in the Middle Belt, Umuleri and Aguleri in Anambra State, Ife-Modakeke in Osun State, Ijaw and Itsekiri in the Niger Delta. The South West also witnessed intractable, interpenetrated ethnic strife stretching between the Yorubas and the Hausa settlers in the Shagamu, Ogun State and some parts of Lagos State, the Ijaw and the Ilaje people in Ondo State. However, the instrumentalisation of cultural differences and belongings is often seen as one of the dominant causes of conflicts in the country. Based on experiences of communal and intra-racial conflict in the country, the study explores cultural diversity and the challenge of ethnic conflict in Nigeria. It also seeks to enrich our understanding of the role played by cultural expressions and identities in triggering or exacerbating conflicts based on factors of nationality, ethnicity and language. The study further explores a set of methodological proposals for the elaboration of indicators on cultural diversity and conflict prevention. The study also examines the viability of tools and resources available to foster intercultural dialogue between different ethnic groupings in the country. More precisely, it makes suggestions on how cultural diversity could be seen as an asset in conflict prevention, mediation and resolution in Nigeria.