<p>South Asia, including Nepal, has been identified as a region with particularly low nitrogen use efficiency (NUE), exacerbating both economic inefficiencies for farmers and environmental concerns. Given that nitrogen is a key input for crop growth, improving NUE in this region is crucial for the sustainability of agriculture in Nepal. Thus, this paper estimates crop NUE in the Terai region of Nepal and examine the farm level drivers. The study employed the partial nutrient balance approach to calculate NUE. Multiple regression analysis was conducted to identify factors influencing NUE. The results indicate that the average NUE in crop production was 38.2%, indicating widespread inefficiency. Only 16.3% of farmers fell within the desirable NUE range. Rice NUE influences the overall NUE trend. A combination of agronomic practices with the best NUE included minimum tillage, synchronization of fertilizer application with irrigation or rainfall, and incorporating fertilizers into the soil. Farmers who maintained records of fertilizer use demonstrated significantly higher NUE. In contrast, deep tillage practices were associated with lower NUE. Geographical variations were observed, with farmers in Morang district achieving higher NUE than those in Mahottari and Kailali. The findings highlight the need for improved nitrogen management practices, particularly in rice cultivation, to enhance efficiency and reduce environmental impacts. Tailored training on nitrogen management practices is recommended to increase NUE and promote sustainable agricultural practices in the region.</p>