This paper discusses an indicator-based framework – consisting of seven indicators, four parameters, and an index – to assess adaptive capacity of the water resources system in the Nepalese context and applies this framework to the Bagmati River Basin (BRB) in Nepal. With respect to the BRB, and Nepal in general, the study results show variations in adaptive capacity of the water resources system across the river basin (eight districts within the BRB), at different geographical (district, river basin and national level) as well as temporal (over decades) scale. Such variations suggest a need of differential policy interventions at different spatial scale to achieve adaptive management of the water resources. The adaptive capacity index can be used to prioritize basins, the adaptive capacity parameters can be used to identify the broader areas of intervention in the selected basin, and adaptive capacity indicators reveal the degree of attention required to strengthen adaptive capacity of the water resources system.