United Nations Sustainable Development Goal 6 targets access to water and sanitation for all people in the next 15 years. However, for developing countries such as Nepal, it is more challenging to achieve this goal given its poor infrastructure and high population growth. To assess the water crisis in the most developed and populated area of Nepal, the Kathmandu Valley, we estimated available water resources and domestic water demand in the valley. We estimated a supply deficit of 102 million liters per day (MLD) in 2016, after completion of the first phase of the Melamchi Water Supply Project (MWSP). If the MWSP is completed within the specified timeframe, and sufficient treatment and distribution infrastructure is developed, then there would be no water deficit by 2023–2025. This indicates that the MWSP will make a significant contribution to the valley’s water security. However, emphasis must be given to utilizing all of the water available from the MWSP by developing sufficient water treatment and distribution infrastructure. Alternate mitigation options, such as planning land use for potential recharge, introducing micro- to macro-level rainwater harvesting structures, conjunctive use of surface and groundwater resources, and water demand-side management, would also be helpful.