Though the Ministry of Foreign Affairs (MOFA) is the government agency responsible for conducting the foreign relations of Nepal, historically, it has been the Office of the Prime Minister (PMO) that has exercised the authority to formulate the country's foreign policies. Nepal maintains a policy of non-alignment and pursues friendly relations with a wide range of countries. Due to its strategic location between two regional giants, China and India, Nepal’s foreign policy is largely centered on maintaining balanced and peaceful ties with both neighbors while safeguarding its sovereignty and independence. Nepal is a member of various international organizations, including the United Nations, the South Asian Association for Regional Cooperation SAARC, and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation BIMSTEC. The country actively participates in regional cooperation efforts and seeks to enhance economic, cultural, and diplomatic exchanges with countries worldwide. Nepal’s foreign relations also emphasize development assistance, trade partnerships, and promoting peace and stability in South Asia.

Constitutionally, Nepal's foreign policy is to be guided by "the principles of the United Nations Charter, nonalignment, Panchsheel (five principles of peaceful coexistence), international law and the value of world peace."

Nepal's most substantive international relations are perhaps with international economic institutions such as the Asian Development Bank, the International Monetary Fund, the World Bank, and the South Asian Association for Regional Cooperation. Nepal also has strong bilateral relations with major providers of economic and military aid, such as France, Germany, Japan, South Korea, Switzerland, the United States, and particularly the United Kingdom, with whom military ties date back to the nineteenth century. The country's external relations are managed by the Ministry of Foreign Affairs and the Prime Minister's Office.

In its foreign policy, Nepal generally seeks to balance its relations with its large neighbors India and China in order to avoid dependency on either one. Nepal's relation with China has seen a major upswing in the recent years with China now becoming Nepal's top 5 aid donor to Nepal. In 2021, Indian government also announced increments of aid to Nepal by nearly 13% to $130 million, to counter China's growing footprint in Nepal. However, data on the actual disbursement of aid by the Indian government remains unclear.

Nepal joined the UN in 1955. The Nepalese map filed at the UN in 1955 was accepted without any disputes by any other UN member. Both India and China without any objections, accepted the map of Nepal filed at the UN in 1955 while Nepal's third neighbor, Kingdom of Sikkim was not a member of the UN.

However, with degradation of relations between India and China during late 1950s, Indian government initiated a 'Forward Policy' along its northern frontiers which resulted in Indian military outposts being built in all unmanned areas along India's northern border. Successive Nepali government's from 1990 onwards, have continued their objection to Indian occupation of certain Nepali territories under the guise of India's 'Forward Policy'. A joint border commission continues to work on resolving the issue of removal of Indian military outpost from Nepal's Kalapani territory. As of 2017^[update], Nepal has border disputes with India at Lipulekh and Kalapani between Darchula district and Uttarakhand, and at Susta bordering Bihar's Nawalpur district. In 2018, EPG (Eminent Persons Group), a joint committee between Nepal and India finished a report on the disputed territories between these two countries. The report is yet to be submitted to the head of governments of both countries.

Nepal has been a member of the World Trade Organization (WTO) since 23 April 2004 and on 24 January 2017 became the 108th WTO member to ratify the WTO's Trade Facilitation Agreement.

List of countries which Nepal maintains diplomatic relations with: