Background Emergence of antibiotic resistance among pathogenic strains has spread due to production of β-lactamases, which can lead to failure of empirical therapy in clinical settings. Inappropriate use of antibiotics, particularly third generation cephalosporins has contributed to the development of antimicrobial resistance (AMR). This study aims to determine the prevalence of Extended Spectrum β-Lactamase (ESBL) production in E. coli and Klebsiella species isolated from various clinical samples. Methods This cross-sectional study was conducted at International Friendship Children's Hospital, Kathmandu, Nepal from August 2017 to January 2018. Various clinical samples that included urine, pus, Cerebro-Spinal Fluid (CSF), body fluids, wound swab, endotracheal tip, catheter tip and blood were processed for culture. Following sufficient incubation, isolates were identified by colony morphology, gram staining and necessary biochemical tests. Identified bacterial isolates were then tested for antibiotic susceptibility test by modified Kirby Bauer disc diffusion method, and were subjected to Extended Spectrum Beta Lactamase (ESBL) screening by using 30µg cefotaxime and ceftazidime. ESBL production was confirmed by combination disc method. Results From a total of 103 non-duplicated clinical isolates, E. coli (n=79), Klebsiella pneumoniae (n=18) and K. oxytoca (n=6) were isolated from different clinical specimens. Majority (62.1%; 64/103) exhibited Multi-Drug Resistance (MDR) and 28.2% (29/103) were ESBL producers. All of ESBL producing isolates were resistant towards ampicillin, cefotaxime, ceftriaxone, ceftazidime. Most ESBL producers were found to be susceptible towards imipenem (89.7%; 26/29), nitrofurantoin (82.8%; 24/29), piperacillin/tazobactam (79.3%; 23/29), and Amikacin (72.4%; 21/29). Conclusions High prevalence of multi-drug resistant ESBL organisms found in this study warrants restricting empirical treatment of the bacterial infection. Identification of ESBL producers in routine treatment of infectious diseases can reduce unnecessary and inappropriate antimicrobial use and can reduce the preventable morbidity and mortality.