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Synopsis The contemporary political history of Nepal is best characterized as the struggle for democracy.  During the last more then five decades the sustenance of democracy has been a major issue of the Nepali politics.  Why democracy has failed in Nepal? What are the problems, challenges and prospects of democracy in that country? These are highly significant issues of the Nepali politics today.  In fact, the Nepali politics is passing through a critical phase.  The people are aspiring for a new phase of democracy and the leadership is passing through a testing time.  The joining of Maoists the political mainstream is a remarkable achievement.  It is now for the democratic leadership of Nepal to utilize this opportunity to lay down a strong foundation of democracy, stability and peace in the country.  The present study largely focuses on these and other such issues relating to the problems and prospects of democracy in Nepal.  It provides an indepth analysis of the post-April, 2006 political developments in Nepal and also an analysis of the events leading to the promulgation of the interim constitution and the Maoists joining the interim government.