Distribution and community structure of treeline birch (Betula utilis D. Don) forest in a trans-Himalayan dry valley was studied in Manang (central Nepal) with the major focus on regeneration. Along five vertical transects, a total of 41 square quadrats (10 m x 10 m) were sampled to determine the importance value index (IVI) of tree species, distribution pattern of seedlings and saplings, and soil attributes. Regeneration was assessed by a density–diameter curve. Moisture plays an important role in spatial (horizontal) distribution of Betula utilis. Pure Betula forest forming the treeline was mature, with high basal area (2.3%), but mixed Betula forest at lower elevations was young. This might have developed after large-scale clear cutting of Abies spectabilis. If not severely disturbed, mixed Betula forest may be replaced by Abies spectabilis. In general, Betula utilis was regenerating, as evident from a reverse J-shaped density–diameter curve for both forests. However, the distribution of seedlings and saplings was spatially heterogeneous and appeared to depend on canopy cover. The stands with highest seedling and sapling densities of Betula utilis had no trees. Betula seedlings were absent where the tree density and basal area (BA) exceeded 20 stems/100 m2 and 1.0% respectively. It was apparent that Betula seedlings could not establish under their own closed canopy even if they produced viable seeds. Partial canopy opening may induce seedling establishment and hence continuous regeneration of Betula utilis at mature stands. The tree-line formed by Betula utilis was abrupt — the anthropo-zoogenic type — without the krummholz zone.