The growing application of information and communication technology (ICT) and their subsequent use in strengthening interaction among civil societies, communities, citizens, and businesses have given rise to a new governance paradigm known as e-governance. E-governance came both in developed and developing countries as a quest of making public institutions more transparent, accountable, and efficient for the better delivery of public services. This chapter discusses the prospects and challenges of ICT for improving service delivery in Nepal which is considered an important tool to help meet the Millennium Development Goals (MDG goals). The study concludes that there has been improvement in the application of ICT as well as internal efficiency in the decision-making process. However, there is room for improvement in the service delivery provision. It has decreased discrimination and enhanced accountability of officials, but citizen’s inclusion in the public decision-making process and empowerment, though improved from before, still remains important aspects that need due attention.