Production and  profit from maize farming can be substantially increased by allocating resources efficiently and adopting improved maize variety. In this context, a study was undertaken to determine the allocative efficiency and factors affecting adoption of improved maize variety in Eastern hills of Nepal. Random sampling was conducted in eastern part of Khotang district namely, Halesi municipality and Diktel Rupakot Majuwagadi municipality during month of March 2019. Pretested semi-structured questionnaire was administered among 80 randomly selected farmers cultivating maize since last two years. Face to face interview was scheduled to obtain data. Cobb Douglas production function was used to determine allocative efficiency; probit regression model was launched to determine factors affecting adoption of improved maize variety.  Significant positive relation of cost of seed, planting, and weeding with income has suggested to increase expenditure on certified maize seed over own farm seed, line sowing over broadcasting, and weeding. The model revealed that increasing all the factors of production by 100% would result in increase in income by 71.83%. Furthermore, cultivating improved maize variety is more profitable than own farm seed. Probit regression model showed that, farmers who have received training, who were member of cooperatives and who have received high schooling were more likely to adopt open-pollinated improved maize variety. Unavailability of inputs (seed, fertilizer, and labor), insect pest attack and adverse climatic conditions were major constraint of maize farming. Therefore, it would be better to suggest maize producers to increase expenditure on seed; make maize field weed free and adopt line sowing method. In addition, providing training, increasing access over inputs and encouraging farmers towards cooperatives could be virtuous for sustainable maize production.