Coffee is a major plantation cash crop of hills of Nepal. Gulmi is one of the popular districts for coffee production and export in Nepal. This research is an attempt to assess the production potentiality and profitability of coffee in Gulmi district. This study was carried out in four rural municipalities of Gulmi district namely Ruru rural municipality, Dhurkot rural municipality, Satyawoti rural municipality and Musikot municipality. A total of 100 samples (25 from each rural municipality) were selected using simple random sampling technique. Face to face (FtF) interview method was used to collect primary data using pretested semi-structured questionnaire. The economic indicators of coffee production like gross revenue, gross margin, benefit-cost ratio (BCR) and profitability index (PI) were calculated. BCR and PI were found to be 2.84± 0.59 and 2.50± 1.25, respectively. Gross margin per ropani was calculated to be NRs. 15675.29 ± 7189.72. The contribution of coffee in total household income was 12% in Gulmi showing it to be one of the major influencing commodities. The major production problem was found to be insect attack in the district while the major marketing problem was the low market price. The insights of this research were that coffee has the potentiality to uplift the rural income of Gulmi but at the same time there were poor extension services for coffee growers such that farmers had shown dissatisfaction towards coffee enterprise. Therefore, effective package of production and value chain monitoring should be introduced by the Nepal government in order to address the production and marketing constraints of coffee producers.