Adequate iodine concentration in breastmilk (BMIC) is essential for optimal neonatal thyroid hormone synthesis and neurological development in breastfed infants. For many decades, iodine deficiency has been a public health problem in Nepal. However, recently, excessive iodine intakes among Nepali infants have been reported. This study aimed to measure BMIC and urinary iodine concentration (UIC) among lactating women in a peri-urban area of Nepal. Iodine concentration was measured in spot urine (n = 485) and breastmilk samples (n = 291) of 500 randomly selected lactating women. The median (p25, p75) BMIC and median UIC were 250 (130, 370) µg/L and 230 (135–377) µg/L, respectively. Around 82% had BMIC > 100 µg/L, 61% had BMIC > 200 µg/L and 81% had UIC > 100 µg/L, 37% had >300 µg/L and 20% had >500 µg/L. In multiple linear regression models, time since birth (ß 3.0, 95% CI (0.2, 5.0)) and UIC (ß 1.0, 95% CI (0.1, 2.0)) were associated with BMIC, explaining 26% of the variance. A large proportion of the women had adequate BMIC and UIC; however, a subset had high iodine concentrations. These findings emphasize the importance of carefully monitoring iodine intake to minimize the risk of iodine excess and subsequently preventing transient iodine-induced hypothyroidism in breastfed infants.