Nepal has a negligible share of global Green House Gases (GHGs) emission. However, amidst sluggish economic growth rate, the emission is increasing at significantly higher rate compared to its fast growing neighboring economies like China, India and Bangladesh. This higher growth rate of emission is mainly due to the constantly increasing use of fossil fuels, emission from livestock, and use of nitrogen fertilizer. Sector-wise emission shows that agriculture and forestry are two most important sectors contributing almost ninety percent of the total emissions. Hence, any mitigation effort in Nepal should consider these two sectors, which are also the most important sectors for poor people. Consequently, intervention in these sectors will help to build rural community's resilience to Climate Change (CC). Increase in temperature and variable rainfall pattern have a negative direct influence on water resources at the highest level followed by agriculture, forest, and health sectors of the country. Increased risk of Glacial Lake Outburst Floods (GLOFs) and higher variability in run-off will adversely affect livelihood assets. Crop loss due to flooding, inundation, landslide, and drought is a common phenomenon in Nepal causing reduced production of major crops. Nepal is experiencing depletion of forest land due to landslides, floods, water erosion, and forest fires. The spread of vector-borne disease in the new regions as a consequence of CC is the major challenge in the health sector. Being signatories of major international legislations related to CC, Nepal has a prospect to generate revenue through mitigation effort, which could be used to deal with adverse impact caused by CC. Alternative energy promotion, forest management, and agricultural practice are potential areas, which can generate revenue from carbon trading. All these prospective areas have multiple functions of mitigation, adaptation as well as economic empowerment of the vulnerable section of the population. Therefore, a proactive role of Nepal in international forum with adequate research and development to incorporate these aspects in international negotiations and capacity development of its own in the field is very crucial to deal with the adverse impacts of CC and meet its overarching goal of poverty reduction as well. In addition, further research on the impact of climate variables on agriculture based on the historical evidence as well as livelihood of rural poor based on the household level data is recommended.