To assess the vulnerability of water resources in the Bagmati River Basin in Nepal, this paper adopts an indicator-based approach wherein vulnerability is expressed as a function of water stress and adaptive capacity. Water stress encompasses indicators of water resources variation, scarcity, and exploitation and water pollution, whereas adaptive capacity covers indicators of natural, physical, human resource, and economic capacities. Based on the evaluation of eleven indicators, which were aggregated into eight vulnerability parameters, an increasingly stressful situation and lack of adaptive capacity became evident. Considerable spatial variation in indicator values suggests differential policy options. While the northern parts need attention to reduce pollution loading and conserve vegetation cover, the southern parts need improvements in physical capacity, i.e. water infrastructures. The comprehensive and easily interpretable findings of the study are expected to help decision makers reach sound solutions to reduce freshwater resources vulnerability in the Bagmati River Basin, Nepal. With its inherent flexibility, the approach has demonstrated its potential for application in different times and areas for monitoring and comparison purposes.