<p>Escalating global challenges like population growth and climate change have raised the circular bioeconomy (CBE) concept. In Nepal, abundant bioresources in agricultural residue, livestock manure, residential and industrial organic waste, and wastewater hold significant potential to propel the transition of CBE. This study examined the comprehension and awareness of CBE among different stakeholders while also evaluating the perceived challenges and opportunities for transitioning to CBE in Nepal. Key insights were gathered through a structured questionnaire survey involving 83 respondents from academia, government, NGOs, and the private sector. A Systems Thinking (ST) approach, integrating Causal Loop Diagram (CLD), was used to understand the systemic complexity of the transition to CBE. This study reveals that most respondents conceptualize CBE primarily as the principle of 3Rs (reduce, reuse and recycle), which received the highest weighted mean score (WMS = 2.41), while lack of awareness emerged as the main barrier to adoption (WMS = 2.19). Policymakers were identified as the most responsible actors for driving the transition (WMS = 2.83), and environmental and quality standards were rated as the most important policy instrument (WMS = 2.44). The study synthesizes these perspectives and develops a theoretical framework that maps feedback loops, delays, and leverage points critical to Nepal’s CBE transition. It further highlights the need for effective policy actions and commitment from all relevant stakeholders. Lastly, this study offers actionable recommendations for governmental bodies, academia, and industrial sectors regarding favorable strategies for policy formulation and practical implementation of CBE in Nepal.</p>