Forests have been an important component of the earth's environment ever since the planet cooled sufficiently to support life. Forest is a very important resource for keeping the environment clean and in a balanced state particularly in a mountainous country like Nepal. As a result of population pressure on the forest resources such as shifting cultivation, over grazing, commercial felling of trees and encroachment for agricultural land, forest resources in Nepal are being depleted to a great extent resulting in severe ecological consequences in the form of soil erosion, landslides and flood hazards. It is obvious that the destruction of the forests also means, at the same time, the destruction of ecosystems of soils, plant communities and animal communities leading to severe environmental consequences. In recent years, high rates of population growth leading to consequent pressure on forests has led to widespread deforestation, causing severe environmental problems in Nepal. The main objective of this paper is to analyse the environmental impact of deforestation in Nepal. This paper, after throwing light on the brief geographical setting, seeks to analyse the importance and pattern of forest resource use, highlight the present state of the forest and analyse the causes and environmental implications of deforestation in Nepal.