Background: Preterm birth is a worldwide epidemic and a leading cause of neonatal mortality. In this study, we aimed to evaluate the incidence, risk factors and consequences of preterm birth in Nepal.Methods: This was an observational study conducted in 12 public hospitals of Nepal. All the babies born during the study period were included in the study. Babies born <37 weeks of gestation were classified as preterm births. For the association and outcomes for preterm birth, univariate followed by multiple regression analysis was conducted. Results: The incidence of preterm was found to be 93 per 1000 live births. Mothers aged less than 20 years (aOR 1.26 ;1.15-1.39) had a high risk for preterm birth. Similarly, education of the mother was a significant predictor for preterm birth: illiterate mothers (aOR 1.41; 1.22-1.64), literate mothers (aOR 1.21; 1.08-1.35) and mothers having basic level of education (aOR 1.17; 1.07-1.27). Socio-demographic factors such as smoking (aOR 1.13; 1.01-1.26), use of polluted fuel (aOR 1.26; 1.17-1.35) and sex of baby (aOR 1.18; 1.11-1.26); obstetric factors such as nulliparity (aOR 1.33; 1.20-1.48), multiple delivery (aOR 6.63; 5.16-8.52), severe anemia during pregnancy (aOR 3.27; 2.21-4.84), antenatal visit during second trimester (aOR 1.13; 1.05-1.22) and third trimester (aOR 1.24; 1.12-1.38), <4 antenatal visits during pregnancy (aOR 1.49; 1.38-1.61) were found to be significant risk factors of preterm birth. Preterm has a risk for pre-discharge mortality (10.60; 9.28-12.10). Conclusion: In this study, we found high incidence of preterm birth. Various socio-demographic, obstetric and neonatal risk factors were associated with preterm birth. Risk factor modifications and timely interventions will help in the reduction of preterm births and associated mortalities. Trial registration: ISRCTN30829654