The paper aims to explore the current scenario of foreign direct investment in Nepal. Nepal is passing through transitional economy. Being least developed countries it has been facing huge resources gap which to be fulfilled attracting capital from private sector. Foreign investment is most important resource for the economic development of the country. It helps to stimulate competition, productivity and innovation. Further, it generates income and employment opportunities resulting in higher wages, competitive price, more revenue, skills and technology transfer and increased foreign exchange earnings. There is no debate that FDI plays significantly vital role for the country like Nepal. To attract the foreign investment in Nepal, government should pay proper attention to create investment friendly environment through revision of acts, rules and policies in one hand and maintain law and order in another hand.