The study examines the effect of compensation on employees' performance in Nursery and Primary Schools in FCT, Abuja. The study adopted survey research design. The population of the study consists of five (5) Nursery and Primary Schools in FCT, Abuja viz: Hugs and Cuddles International School, the Hives Academy, All Well Academy, the Vine Kiddies International School and Starlit International School. The population of employees is 165 and the sample size is 165. The study tested for reliability and found that all the instruments were reliable. The study used regression analysis with the aid of statistical package for social science version 20 to analyze the data. The study found that there is negative and insignificant effect of compensation on employees' performance in Hugs and Cuddles International School, the Hives Academy, All Well Academy, the Vine Kiddies International School and Starlit International School, FCT, Abuja. Other conclusions were that there is negative and insignificant effect of financial compensation on employees' performance in Hugs and Cuddles International School, the Hives Academy, All Well Academy, the Vine Kiddies International School and Starlit International School, FCT, Abuja. Also, there is positive and significant effect of non-financial compensation on employees' performance in the selected institutions. The study therefore recommends that the selected institutions should re-strategize their compensation policies or programmes to enhance employees' performance. They should concentrate more on non-financial compensation since it enhances employees' performance in their institutions.