Background <p>Ambient fine particulate matter (PM_2.5) is a major environmental health risk in South Asia, yet evidence quantifying its combined health and economic burden at the city level remains limited in low- and middle-income countries. Kathmandu Valley, Nepal, experiences persistently high PM_2.5 concentrations due to rapid urbanization, traffic emissions, biomass combustion, and adverse topography.</p> Methods <p>This study applied an environmental burden of disease framework to estimate mortality, disability-adjusted life years (DALYs), and economic costs attributable to long-term ambient PM_2.5 exposure in Kathmandu Valley. Seasonal PM_2.5 concentrations were obtained from seven government-operated monitoring stations in the Kathmandu Valley. Population-attributable fractions were calculated using a log-linear concentration–response function, and health losses were monetized using a value-of-a-statistical-life-year approach.</p> Results <p>The annual mean PM_2.5 concentration was 99.3&#xa0;µg/m³, nearly 20 times the WHO 2021 air quality guideline, with the highest seasonal levels occurring in winter (135.2&#xa0;µg/m³). Long-term PM_2.5 exposure was associated with approximately 8,900 premature deaths annually (43% population-attributable fraction). The total health burden was estimated at 575,247 DALYs per year, comprising 340,247 years of life lost and 235,000 years lived with disability. The associated annual economic cost was approximately USD 1.25&#xa0;billion, predominantly affecting the working-age population.</p> Conclusion <p>Ambient PM_2.5 pollution imposes a severe and persistent health and economic burden on the Kathmandu Valley, with impacts far exceeding international health-protective thresholds throughout the year. These findings underscore the urgency of implementing effective air quality management strategies and provide robust, policy-relevant evidence to support investment in pollution reduction and public health protection in Nepal.</p>