Before Nepal's emergence as a nation in the latter half of the 18th century, the designation 'Nepal' was largely applied only to the Kathmandu Valley. Thus up until the unification of the country, Nepal's history is largely the history of the Kathmandu Valley. References to Nepal in famous Hindu epics such as the Mahabharata, Puranas and also Buddhist and Jain scriptures, establish the country's antiquity as an independent political and territorial entity. The Vamshavalis or chronicles, the oldest of which was written during the 14th century, are the only fairly reliable basis for Nepal's ancient history. The Vamshavalis mention the rule of several dynasties the Gopalas, the Abhiras and the Kiratas -- over a stretch of centuries. However, no extant historical evidence has yet authenticated the rule of these legendary dynasties. The documented history of Nepal begins with the Changu Narayan temple inscription of King Manadeva I (C 464-505 A.D.) of the Lichavi dynasty.

Newars are thought to have lived in the Nepal Valley since the 4th century AD, developing a Hindu-Buddhist culture. The Gurkha principality was later established by RAJPUT warriors from India, and in 1769 they conquered lands beyond the present-day borders of Nepal. After incursions into northern India in which the Gurkhas were defeated, Nepal lost part of its territory to British India but retained its independence and enjoyed close ties with the British.It has maintained its close association with India since the latter gained independence in 1947.

Nepal, the world's only Hindu monarchy, was controlled by a hereditary prime ministership until 1951. The nation's first election was held in 1959, but in 1960, King Mahendra dismissed the cabinet, dissolved parliament, and banned political parties. A 1962 constitution created a nonparty panchayat (council) system of government. After a 1980 referendum approved a modified version of the panchayat system, direct parliamentary elections were held in 1981. A dispute with India led to India's closing of most border crossings from March 1989 to July 1990, and the resultant economic crisis fueled demands for political reform. After months of violence, King Birendra Bir Bikram Shah Dev dissolved parliament. The opposition formed an interim government in April 1990, and a new constitution creating a constitutional monarchy and a bicameral legislature became effective on Nov. 9, 1990. Multiparty legislative elections held in May 1991 were won by the centrist Nepali Congress party; the Communists became the leading opposition party. Mid-term elections in November 1994, which were called after the government lost a parliamentary vote, resulted in a hung parliament and the communists, who emerged as the single largest party, formed a minority government.