Tourism is an important source of foreign exchange earnings for the government and contributes to the livelihood of millions in developing countries. The purpose of this paper is to explore and illuminate the preliminary impacts of COVID-19 in tourism sector in Nepal and further the paper puts forward policy recommendations for government to avert the worst effects and facilitate recovery. In Nepal, the travel and tourism sector contributes to 8 percent of GDP, 6.7 percent of total employment, and it generates 6 percent of the total foreign exchange earnings. Nepal Tourism Board estimates that loss of 85.2 billion USD monthly from tourism sector only and three in five employees lost their jobs due to COVID-19 in Nepal. The “Visit Nepal 2020” campaign had cancelled which aimed to attract 2 million tourists in the country this year. Tourism sector has already suffered a huge loss, and it is going to take quite to restore. The government should form special task force to create economic response package that will support Nepalese, their job, their businesses from the global impact of COVID-19, and to ready the economy to recover. Keywords: Covid-19, Tourism, Economy, Nepal