The objectives of this paper are, first, to provide improved estimates of recent fertility levels and trend in Nepal and, second, to analyze the components of fertility change. The analysis is based on data from Nepal’s 1996 and 2001 Demographic and Health Surveys. The first part of the analysis assesses the quality of the data from the 1996 and 2001 Nepal Demographic and Health Surveys (DHS) on which the fertility estimates are based. Fertility levels and trends are then estimated using the own-children method of fertility estimation. The ownchildren estimates incorporate additional adjustments to compensate for displacement of births, and they are compared with previously published estimates derived by the birth-history method. Fertility is estimated not only for the whole country but also by ecological region, development region, urban/rural residence, and woman’s education. The own-children estimates indicate that the total fertility rate (TFR) fell from 4.96 to 4.69 births per woman between the 3-year period preceding the 1996 survey and the 3-year period preceding the 2001 survey. About three-quarters of the decline stems from reductions in age-specific marital fertility rates and about one-quarter from changes in age-specific proportions currently married. Further decomposition of the decline in marital fertility, as measured by births per currently married woman during the 5-year period before each survey, indicates that almost half of the decline in marital fertility is accounted for by changes in population composition by ecological region, development region, urban/rural residence, education, age at first cohabitation with husband, time elapsed since first cohabitation, number of living children at the start of the 5- year period, and media exposure. With these variables controlled, another one-third of the decline is accounted for by increase in the proportion sterilized at the start of the 5-year period. About one-fifth of the fertility decline is not accounted for by any of these variables, but this remaining unexplained component does not differ significantly from zero.