The study analyzes the role of Microfinance in poverty reduction in Neelkantha Municipality, Nepal. This descriptive and analytical study was conducted with a well-structured questionnaire that was developed to collect data from 223 respondents using a purposive sampling technique. Simple descriptive statistical tools as well as inferential statistical tools, i.e., paired t-tests, have been used to analyze the role of Microfinance in poverty reduction. Data was analyzed using the Statistical Package for Social Science (SPSS) to generate mean and standard deviations, and a t-test was used to diagnose the collected data. According to the findings of this study, microfinance financial services boosted the annual average monthly income. Most consumers profited from microfinance in various areas, including food security, education, health care, loans, shelter, and diversification of income sources. As a result, the study contends that microfinance had an essential role in raising living standards and lowering poverty. This study is crucial for policymakers because it provides a more decisive direction for anti-poverty policies based on various dimensions, geographies, and demographic distributions.