This study investigates the effect of financial development on economic performance in Sudan over the period (1970- 2004). The short-run and long-run relationship between financial development and economic growth and other conditioning variables on economic growth are estimated by using the most recently developed autoregressive distributed lag (ARDL) approach to co- integration analysis proposed by Pesaran and Shin (1999).The results overwhelmingly indicate a weak relationship between financial development and economic growth in Sudan. Although the coefficient of M3/GDP is significant, it is negative, whilst the impact of credit to private sector by banks to real GDP is negative and insignificant. These findings may be attributed to the inefficient allocation of resources by banks, along with the absence of an appropriate investment climate required to foster significant private investment and promote growth in the long run, and to the poor quality of credit disbursal of the banking sector in Sudan. Moreover, the econometric analysis suggest that the speed of adjustment in the estimated models is relatively high and had the expected significant and negative sign.