Petroleum Minister Ibe Kachikwu said a litre of petrol would now cost a maximum of 145 naira (Â£0.50), up from about 86.5 naira.
As retailers get more money, the government aims to further cut back on costly subsidies.
Fuel shortages have seen Nigerians paying up to 250 naira a litre on the black market.
Despite being one of Africa's largest oil producers, Nigeria has to import fuel to meet demand.
Nigerian refineries are dilapidated and work at a fraction of their capacity.
"The main reason for the current problem is the inability of importers of petroleum products to source foreign exchange at the official rate due to the massive decline of foreign exchange earnings of the federal government," Mr Kachikwu said.
"We expect that this new policy will lead to improved supply and competition and eventually drive down pump prices," he added.
Nigeria has decided to allow petrol prices to rise by two thirds, in a bid to ease crippling fuel shortages.