The Himalaya Plateau including Nepal is ‘greening up’ that has important implications to ecosystem services such as water supply, carbon sequestration, and local livelihoods. Understanding the combined causes behind greening is critical for effective policy makings in forest management and climate change adaptation towards achieving sustainable development goals. This national scale study comprehensively examined the natural and anthropogenic drivers of the long-term trend of vegetation dynamics across Nepal by correlation analysis and multiple linear regression analysis. We integrated multiple sources of data including global satellite-based leaf area index (LAI), climate data, landcover data, and forest land management information. Our study reveals a remarkable annual mean LAI increase of 22% (0.009 m2 m−2 yr−1) (p < 0.05) from 1982 to 2020, with an acceleration in the rate of increase to 0.016 m2 m−2 yr−1 (p < 0.05) after 2004. The community forestry (CF) program, forest area changes, and soil moisture availability accounted for 40%, 12%, and 10% of LAI temporal variability, respectively. Our analysis found soil moisture and forest area changes to be the primary drivers of the greening trend before 2004, while CF and forest expansion were the dominant factors thereafter. Additionally, interannual vegetation dynamics were significantly influenced by winter precipitation, incoming solar radiation, and pre-monsoon soil moisture. The projections based on four Earth System Models from Coupled Model Intercomparison Project Phase 6 suggest that Nepal’s greening trend is expected to continue at a rate of 0.009 m2 m−2 yr−1 (p < 0.05) throughout the 21st century. We conclude that forest management program (CF) amid climate change that alters water and energy conditions have enhanced land greening, posing both opportunities and risks to ecosystem services in Nepal. This study provides much needed national-level information for developing forest management policies and designing Nature-based Solutions to respond to climate change and increasing demands for ecosystem services in Nepal.