The Nepalese government, following the monarchy that ended in 2007, legalised homosexuality in 2007 along with the introduction of several new law sets. Based on the ruling of the Supreme Court of Nepal in late 2008, the government is looking into legalising same-sex marriage. According to several sources, the new Nepalese constitution, which is currently being drafted, will include same-sex marriage and protection for sexual minorities.
Template:Unreferenced section Before the time of the Democratic Republic, private, homosexual relations between consenting adults was a crime, with a maximum punishment of two years in prison. Cross-dressing was also illegal under various laws against public immorality.
2007 Court decision
On 21 December 2007 the Supreme Court ruled that the new democratic government must create laws to protect LGBT rights and change existing laws that are tantamount to discrimination.Template:Dead link
Despite their participation in the demonstrations that brought down the monarchy, gay-rights groups found themselves ignored by the political establishment, and turned to the judiciary as a more effective way to secure their rights. The media and public have also become more sympathetic to LGBT rights since an incident in which a police officer slit the throat of a transgendered girl.
Recognition of same-sex relationships
On 18 November 2008 the Supreme Court directed the government to enact laws enabling equal rights to LGBT citizens. While not explicitly legalising same-sex marriage, the ruling instructed the government to form a committee to look into same-sex marriage.Template:Dead link. According to Indian media in 2009, a bill for this was being drafted and was supposed to be introduced by 2010. In the drafting of the new Nepalese constitution, same-sex marriage and protection for sexual minorities was supposed to be established. However, negotiations on the new Constitution failed and the Prime Minister dissolved the Constituent Assembly on May 28, 2012 in preparations for new elections. As a result, the future of same-sex marriage is uncertain.
In 2012 Nepal's Supreme Court recognized a live-in relationship between two lesbians despite the efforts of the family of one of the women to separate them.  The Court allowed Rajani Shahi to live with her partner Prem Kumari Nepali as she wished, rather than with her husband. 
The Communist Party of Nepal-Maoist has made several homophobic statements during the civil war. Until 2007, party members have described homosexuality as "a production of capitalism" that "doesn't exist under socialism", and LGBT people as "social pollutants." Since 2008 with the end of the civil war and beginning of multi-party democracy, the Maoists have come out as supporters of LGBT rights.
The human rights organization Blue Diamond Society, established in 2001, seeks to represent LGBT people in Nepal politically and provide assistance with sexual health in the community. A drop-in centre exists in Kathmandu.
However, according to the Blue Diamond Society, gays, lesbians, bisexuals and Metis (cross-dressing males) sometimes suffer from violence, rape, abuse, blackmailing and murder threats and continue to be discriminated against or even abused in work places.
The country's most prolific LGBT acitivist, politician and Blue Diamond Society president Sunil Babu Pant has announced plans of the Nepal Tourism Board to promote Nepal as a gay-friendly tourist destination. An LGBT Tourism conference was supposed to occur in February 2010. Sensitivity training was said to have been conducted in selected catering and hospitality venues.
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- Template:Cite news
- 365gay.com, "Nepal High Court Issues Landmark Gay Ruling," 21 December 2007
- Nepal court rules on gay rights BBC News, 21 December 2007
- Gay activist in Nepal campaigns against discrimination, by Henry Chu, The Christian Science Monitor, 30 June 3008
- Court Decision, Blue Diamond Society
- Prince's marriage stokes gay issue, India Today (accessed 1 November 2009)
- Nepal census recognizes 'third gender'
- Human Rights Watch: "Nepal: Maoists Should End Anti-Gay Violence", 16 April 2007
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- About Us, Blue Diamond Society (accessed 1 November 2009)
- Nepal wants a lot of gay people to come visit, Change.org (accessed 1 November. 2009)
- 23 October 2009: Nepal to Lure Gay Tourists, The Advocate (accessed 1 November 2009)