Child labor is an on-going phenomenon in developing countries. In the world, International Labour Organization (2002) estimates 250 million children to be a part of child workforce. There have been many studies done at the microeconomic level to explain why child labor occurs and what can be done to end it. There are also a growing number of country-specific studies such as one on Vietnam by Erik Edmonds and another on Tanzania by Kathleen Beegle. The country I will study for this thesis is Nepal. In Nepal, there are child labor laws that restrict child labor to children 14 years old and older and are restricted from hazardous work. However in occasional interviews and surveys, they have found that children are still being employed for work. Another important aspect of child labor is the lack of education. In Nepal, the government has been forward thinking enough to provide free primary education and free textbooks for eligible students, but other costs of attendance are a heavy burden on the poor families. The purpose of the paper is to analyze the determinants of child labor in Nepal and to address how the current law in Nepal is affecting the children’s education, child labor, and ultimately the overall quality of life in the country. Idealistically, to find possible steps that could make a difference on child labor and a course of action that could eventually eliminate or minimalize the extent of child labor.