This paper investigates poverty trends in Nepal using three sets of national survey data. It covers the period 1976/77 - 1996/97, divided between 1976/77 - 1984/85 and 1984/85 - 1996/97. We have made a decomposition analysis of poverty in terms of the Foster-Greer-Thorbecke indices. Using a common poverty line to cover all the income distribution data available from the national surveys, we have reached the firm conclusion that poverty declined in Nepal during 1976/77 - 1984/85 but increased during 1984/85 - 1996/97. Tracing the changes in labour productivity for the same periods, we found that the level of poverty correlated highly with changes in labour productivity, especially in the agricultural sectors. (JEL Classifi-cation: D63, I31, I32, J21, J24, J38)