Issues surrounding capital structure and performance which have been widely debated in the finance literature, yet there has not been consensus as to how composition of firm‘s capital impact on firm performance including Nigeria. Thus this study investigated the relationship between capital structure and firm performance in the microfinance banking subsector in Nigeria from 2009 to 2018. The study employed explained variables (debt to equity ratio, long term debt ratio and total debt ratio) representing capital structure and the explanatory variable (return on equity) representing firm performance. Descriptive statistics and regression technique were used for the analysis. The results revealed a negative and insignificant relationship between Debt to equity ratio and return on equity, a positive and insignificant relationship between Long term debt ratio and return on equity and a positive and significant relationship between Total debt ratio and return on equity. The results also indicated that F-statistic is 37.16701 with a probability of 0.026372 indicating that the combined effect of the explained variables on firm performance represented by return on equity is statistically significant. It is therefore recommended that microfinance banks in Nigeria and beyond should devise strategies that are effective to expand their debt profile in order to achieve better performance.