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The literature on economics of education indicates that human capital has a positive association with the economic development of a country. This chapter investigates the role of education, with a particular focus on higher education, in the context of the economic development in Nepal. The Nepalese education system has undergone many important changes in the past few decades that have been rife with political changes. Given the mounting attention to higher education in developing countries, this paper explores its connection to the country’s economic development. The paper also points out to the mismatches, issues, challenges as well as opportunities relating to higher education and economic development of Nepal.