Lumpy skin disease (LSD) is a vector-borne viral disease affecting cattle and water buffalo. This disease causes huge economic losses to dairy farmers due to the drastic reduction in milk production. This study describes the first confirmed outbreak of LSD in cattle and water buffalo from the Gandaki province of Nepal. Suspected outbreak sites in Kaski and Tanahun district of Gandaki Province were visited and 42 samples from 16 animals (12 cattle and 4 water buffalo) from 9 farms showing clinical signs were sampled and tested for LSD at the Central Veterinary Laboratory using the polymerase chain reaction (PCR). Clinical features exhibited by affected animals and their farm characteristics were recorded. The result showed that all 16 animals were positive for LSD. The overall morbidity was 4.85% (95% CI= 3.01- 7.73%) with cattle (7.23%) having higher morbidity compared to water buffaloes (2.44%). However, none of the affected animals died. In total, 93.7% (n= 15/16) of the affected animals had a milk loss with an average milk reduction of 58.7%. The major clinical features observed were swollen lymph nodes (100%), nasal and lachrymal discharge (81.25%), nodular lesions in skin (75%), and fever (50%). Vectors were present in all 9 farms and 5 out of 9 farms had a history of the introduction of new animals. In conclusion, this is the first official confirmation of LSD in the Gandaki province of Nepal. As the potential socio-economic impact of this is high due to the loss of milk production, the Gandaki province government in collaboration with the federal government should develop an appropriate control strategy including vaccination. We suggest government to practice risk-based ring vaccination in susceptible cattle and buffaloes surrounding the confirmed cases. Besides, cattle and buffalo movement need to be regulated. Keywords: Capripoxvirus; Large ruminants; Outbreak investigation; Vector; Vaccines