This paper discusses the relevance of e-learning in the position of distance education in Nigeria. It commences by discussing the meaning of e-learning and distance education. It also discusses the historical background of distance education in Nigeria as well as the operations of National Open University of Nigeria (NOUN) as the first federal University in Nigeria dedicated to the provision of education through distance mode. Furthermore, the paper highlights the prospects and challenges of e-learning in the operation of National Open University of Nigeria. (Contains 3 tables and 2 figures.)