The rich history of Nepal dates back to about ten thousand years, Neolithic tools found in Kathmandu valley indicates that the people have been living in the beds of Himalayas for the distant past although the culture and artifacts are gradually being explored written references to this region shows only by the first millennium B.C.

It appears that people who were probably of Tibeto-Burman ethnicity lived in Nepal two thousand and five hundred years ago, inhabiting small settlements with a relatively low degree of political centralization. The tribes of Indo Aryans came to Nepal around 1500 BC which brought monumental changes in the region by the first millennium B.C. their culture had spread throughout the northern India. One of the earliest alliances was the Shakya clan, whose capital was Kapilavastu, the present day Lumbuni which borders to India. Their most renowned son was Siddhartha Gautama (ca. 563-483 B.C.), a prince who rejected his royalty in search for the meaning of existence and became known as the Buddha, or the Enlightened One.

The first documented dynasty is the Licchavi dynasty in the history of Nepal around 400 A.D., The Licchavis were probably the Rajputs of India migrated from the present day Vaiishali rulled Nepal's present capital Kathmandu Between about 400 and 750 AD. The Licchavi dynasty went into decline in the late 8th century and was followed by a Newari era, from 879, although the extent of their control over the entire country is uncertain. By late 11th century, southern Nepal came under the influence of the Chalukaya Empire of southern India. Under the Chalukayas, Nepal's religious establishment changed as the kings patronised Hinduism instead of the prevailing Buddhism.

The early 12th century saw the leaders whose names ended with the Sanskrit suffix malla ("wrestler"). Initially Malla reign was marked by violent disturbance, but the kings consolidated their power for about 200 years. By late 14th century much of the country began to come under a unified rule. This unity was short-lived: in 1482 the kingdom was carved into three Kathmandu, Patan, and Bhadgaon. Kingdom of Nepal was divided into small States and Principalities. The tiny rulers had no unity among themselves. They often quarrelled with one another for territorial integrity and sovereignty.

Prithivi Narayan Shah the Gorkha ruler later in 1765 set out to unify these kingdoms after several bloody battles and sieges, he managed to unify Nepal three years later. This marked the birth of the modern nation of Nepal. Nepal’s southward expansion under the Shah dynasty resulted in a clash with the English East India Company. The Anglo-Nepalese War (1814-1816) reduced the country to its current size, although Nepal retained its independence but lost its territories west of the Kali River, including present day Uttaranchal state and several Punjab Hill States of present day Himachal Pradesh.

The early 19th century saw instability due to the factionalism among the royal family which led the Kot massacre and brought pro British leader Jung Bahadur Rana into power. Bahadur founded the Rana lineage. The king was made a titular figure, and the post of Prime Minister was made powerful and hereditary. Later in 1923 the United Kingdom and Nepal formally signed an agreement of friendship, in which Nepal's independence was recognised by the UK.

In the 1940s, pro-democratic movements and political parties in Nepal were critical of the Rana autocracy. Meanwhile, China annexed Tibet in 1950, making India keen on stability in Nepal, to avoid an expansive military. Thus India sponsored Tribhuvan as Nepal's new king in 1951, and a new government, mostly comprising the Nepali Congress Party. After years of power wrangling between the king and the government, the democratic experiment was dissolved in 1959, and a "partyless" panchayat system was made to govern Nepal. In 1989, the "Jan Andolan" (People's) Movement forced the monarchy to accept constitutional reforms and establish a multiparty parliament in May 1991. Nepali Congress Party wins first democratic elections. Girija Prasad Koirala becomes prime minister.

On June 1, 2001, the crown prince Dipendra reportedly went on a killing spree in the royal palace, in response to his parents' rejection of his choice of wife. His parents were killed followed by him 3 days later. Following the carnage, the throne was inherited by Birendra's brother Gyanendra. In the face of unstable governments and a Maoist siege on the Kathmandu Valley in August 2004, popular support for the monarchy waned.

On February 1, 2005 Gyanendra dismissed the entire government and assumed full executive powers in the name of combating Maoist movement. In September 2005, the Maoists declared a three-month unilateral ceasefire but which was not reciprocated by the royal government which adamantly vowed to defeat the rebels by force.

The support from the Maoists the seven parliamentary parties (SPA) had arranged a mass uprising against the tyrannical rule of King Gyanendra. Frustrated by lack of security, jobs and good governance, thousands of people ushered onto the streets demanding the king to renounce power outright but the royal government turned even more ferocious. Thousands were injured and 21 people died in the uprising, which was meant to be peaceful but turned violent by the government and its vigilantes. Foreign pressure continued to increase on King Gyanendra to surrender power so that on April 21, 2006 Gyanendra announced that he was giving up absolute power and that "Power was being returned to the People". Many Nepalese protesters however, still carried out rallies in numerous cities and vowed to continue the stir until they would achieve complete abolishment of the monarchy. Finally after 19 days of protests, on April 24 midnight, the king called for the country's parliament to reassemble on April 28. Parliament has since reassembled and already stripped the king of his power over the military abolished his title as the descendent of a Hindu God Vishnu. Furthermore, several royal officials have been indicted, and the Nepalese government is no longer referred to as "His Majesty's Government" which has been changed to "Government of Nepal". An election of the constituent assembly to rewrite the constitution has been declared unanimously to be held in the near future, with the possible abolition of the monarchy as part of constitutional change. And peace negotiations with the Maoists rebels have been going on after the reciprocation of ceasefires.