Background: The basic health service is a fundamental right of every citizen. Appropriate use of medicine is an essential component for the quality of health. Drug use evaluation is a systematic and criteria-based drug evaluation, which ensures the appropriate use of the drug. The purpose of this study was to analyze the drug use situation in primary healthcare centers of Kathmandu valley. Methodology: A cross-sectional descriptive study was performed in all primary healthcare centers of Kathmandu valley. Six hundred prescriptions were analyzed retrospectively, choosing a simple random sampling method for prescribing indicators. One hundred twenty patients were interviewed for patient-care indicators, and health facility representatives were interviewed for health facility indicators. Drug use indicators developed by World Health Organization/International Network for Rational Use of Drugs were used with slight modification. Result: The average number of drugs per encounter was 2.6. The percentage of drugs prescribed by generic names and from the essential medicine list was 60% and 80.9%, respectively. The prescriptions encounters with antibiotics and injections were 58% and 4.2%, respectively. The average consultation and dispensing time were 3.6 min and 54.4 s, respectively. The percentage of drugs actually dispensed was 76.6%. Only half of the patients knew the correct dose of the dispensed drug and no adequate labeling at all. The majority of dispensers were intern nursing students (42%), and all prescribers were medical officers. Ten out of 12 primary healthcare centers had a copy of EML. The availability of key drugs in primary healthcare centers was incomplete (64.7%). Conclusion: The observed values for all World Health Organization indicators deviated from the optimal range. Patient care provided by health facilities was insufficient and thus an effective intervention program for the promotion of rational drug use practice is recommended.