The study was carried out to investigate the effect of unemployment and inflation on economic development in Uganda. The major objective of the study was to examine the effect of unemployment on economic development in Uganda period from 1991 — 2017. The specific objectives were to examine the trend of unemployment in Uganda, to examine the level of economic development and to estimate the relationship between economic development and unemployment in Uganda. The study used secondary data from the International Labour Organization for the unemployment data, Uganda Bureau of Statistics for the economic development data and the World Bank for the inflation data. The data used is yearly data covering the period from 1991 to 2017, The data was then analyzed and presented using OLS, Augmented Dickey Fuller test to test for the presence of the unit root, the Johansen co integration test was employed to test the existence ofthe long run relationship between economic growth and the independent variables. This study revealed that unemployment negatively affected economic development in Uganda for the period under study. Hence, the need by the government and relevant agencies to formulate policies to encourage self-employment and reduce cost of doing business in the country so as to achieve a high, rapid and sustained economic development.