This paper will attempt to answer an important question regarding the study of revolutions in developing countries: how does Liberation Theology address the problems of neocolonialism that plagues the Latin American continent? The analysis will use the Central American nation, Nicaragua, and its Sandinista revolution as a country case. This question is important to the study because it helps to understand the extent or the kind of an impact religion has on revolutions. In Latin America, the population is majority Roman Catholic. Due to this, the hierarchy of the Church and the laity has had a certain influence on the political and economic development of Latin American states. Specifically, the paper will focus on how Liberation Theology addresses the problem of neocolonialism in the developing world. Neocolonialism is the process by which Western governments, institutions and multinational corporations use their economic and political power to continue the exploitation of non- European populations in developing countries. Dependency theory will be utilized in order to understand the relationship between dominant and dependent countries. By having a knowledge of Dependency theory, one can understand the causes of the Nicaraguan Revolution. During the time of the Somoza dictatorship, Nicaragua relied on multinational corporations and funding from the United States government. The exploitive relationship between the United States and Latin America can be better understood within the context of neocolonialism. Liberation Theology critiques this exploitive relationship in a theological context. The end goal of this theological thought is to liberate poor individuals from the systematic forces that keep them in poverty. The example of the Nicaraguan revolution illustrates that Liberation Theology was successful in overcoming the effects of neocolonialism.