Nepal has a short and slowly developing history of psychiatry. Recent political turmoil has crippled Nepalese healthcare in rural areas. Although the final quarter of the 20th century saw some development of psychiatric services in Nepal, the majority of Nepalese people remain deprived of such services even today. There is no national health programme or Mental Health Act. Psychiatric services are hospital based and most are centralised in the capital. Nepalese psychiatrists need urgent help, but they have been unable to form a strong professional body. This report presents the historical background, current state of affairs and suggestions for modernising mental health services in Nepal.