Rice is the most important cereal crop of Nepal from food security and livelihood perspectives. In spite of this, the yield of this crop is quite low and there is wide gap between potential and national average yield. One of the reasons behind it is poor adoption of improved rice varieties in the farming communities. In this article, we analyzed the influence of socio-economic variables on the adoption of these varieties. The data for the study were collected from 180 households spreading across three tarai districts: Siraha, Chitwan and Kailali of Nepal from October to November 2011. A binary logistic regression was employed to analyze the data, and the adoption of improved varieties was defined from the perspective of whether farmers buy seed from the market or not. The result shows that in 72.7% of cases farmers adopt improved variety, and these varieties consist of both modern varieties and farmers' varieties. Farmers' behavior in adopting these varieties is mainly explained by irrigation facility, household's membership in community-based organizations (CBOs), and seed price. The findings from this research might have implications in the agriculture extension policy of Nepal and other developing countries.