Flooding in the rapidly urbanizing city of Birendranagar, Nepal has been intensifying, culminating in massive loss of life and property during July and August 2014. No previous studies have monitored underlying land-cover dynamics and flood hazards for the area. This study described spatiotemporal urbanization dynamics and associated land-use/land-cover (LULC) changes of the city using Landsat imagery classifications for five periods between 1989 and 2016 (1989–1996, 1996–2001, 2001–2011, 2011–2016). Areas with high flood-hazard risk were also identified on the basis of field surveys, literature, and the Landsat analysis. The major LULC changes observed were the rapid expansion of urban cover and the gradual decline of cultivated lands. The urban area expanded nearly by 700%, from 85 ha in 1989 to 656 ha in 2016, with an average annual growth rate of 23.99%. Cultivated land declined simultaneously by 12%, from 7005 ha to 6205 ha. The loss of forest cover also contributed significantly to increased flood hazard. Steep topography, excessive land utilization, fragile physiographic structure, and intense monsoonal precipitation aggravate hazards locally. As in Nepal generally, the sustainable development of the Birendranagar area has been jeopardized by a disregard for integrated flood-hazard mapping, accounting for historical land-cover changes. This study provides essential input information for improved urban-area planning in this regard.