State and local governments in Nigeria over reliance on statutory allocations coming from Federal government affecting their Internally Generated Revenue (IGR) and income diversification strategies. This study examines revenue diversification strategies for Kaiama Local Government Area in Kwara State, Nigeria using case study approach. The research analysed audited financial records, budgets, state fiscal policy documents and previous studies with quantitative data evaluated through descriptive statistics. The findings show that Kaiama LG relies heavily on two revenue sources, statutory allocation and internally generated revenue (IGR), with statutory allocation accounting for over 98% of total revenue. Significant diversification potential exists across all IGR components and external funding sources. However, multiple challenges hinder effective diversification, including administrative inefficiencies, political interference, legal and regulatory constraints, socio-economic factors, technical limitations, public resistance, weak institutions, inadequate resources, and environmental and demographic barriers. To address these challenges, the study proposes the APISE Framework as a comprehensive strategic approach. The research concludes that revenue diversification is both necessary and achievable for Kaiama LG. Key recommendations include expanding IGR streams through systematic phased implementation, optimising available resources, building institutional capacity, leveraging technology for revenue collection and management, and adopting the APISE framework to guide diversification efforts. By implementing these strategies, Kaiama LG can reduce over-dependence on statutory allocations, strengthen financial sustainability, and enhance service delivery to residents.