While playing for Sheffield Wednesday, Nilsson also took part in two international tournaments for his country. The 1990 World Cup proved to be disastrous for Sweden, who were in the same group as Brazil, Scotland, and Costa Rica; Sweden lost all three matches 2–1. However, the team bounced back in Euro 1992, which they hosted, as they reached the semi-finals. Nilsson played in all the games played by Sweden in both tournaments.