Situated south of the Mountain Region, the Hill Region (called Pahar in Nepali) is mostly between 1,000 and 4,000 meters in altitude. It includes the Kathmandu Valley, the country's most fertile and urbanized area. Two major ranges of hills, commonly known as the Mahabharat Lekh and Siwalik Range (or Churia RÍÍÍÍange), occupy the region. In addition, there are several intermontane valleys. Despite its geographical isolation and limited economic potential, the region always has been the political and cultural center of Nepal, with decision-making power centralized in Kathmandu, the nation's capital. Because of immigration from Tibet and India, the hill ranges historically have been the most heavily populated area. Despite heavy out-migration, the Hill Region comprised the largest share of the total population in 1991.

Although the higher elevations (above 2,500 meters) in the region were sparsely populated because of physiographic and climatic difficulties, the lower hills and valleys were densely settled. The hill landscape was both a natural and cultural mosaic, shaped by geological forces and human activity. The hills, sculpted by human hands into a massive complex of terraces, were extensively cultivated.

Like the Mountain Region, the Hill Region was a food-deficit area in the early 1990s, although agriculture was the predominant economic activity supplemented by livestock raising, foraging, and seasonal migrating of laborers. The vast majority of the households living in the hills were land-hungry and owned largely pakho (hilly) land. The poor economic situation caused by lack of sufficient land was aggravated by the relatively short growing season, a phenomenon directly attributable to the climatic impact of the region's higher altitude. As a result, a hill farmer's ability to grow multiple crops was limited. The families were forced to adapt to the marginality, as well as the seasonality, of their environment, cultivating their land whenever they could and growing whatever would survive. Bishop has noted that "as crop productivity decreases with elevation, the importance of livestock in livelihood pursuits . . . increases. For many Bhotia [or Bhote] living in the highlands . . . animal husbandry supplants agriculture in importance." During the slack season, when the weather did not permit cropping, hill dwellers generally became seasonal migrants, who engaged in wage labor wherever they could find it to supplement their meager farm output. Dependence on nonagricultural activities was even more necessary in the mountain ecological belt.

Data as of September 1991