Between 1996 and 2006, the Kingdom of Nepal, already the theatre of political instability, was shattered by an internal armed conflict between the Government and a Maoist non-state armed group. In 2005, the King, Gyanendra Bir Bikram Shah Dev, progressively assumed all executive powers and declared a state of emergency.

Severe restrictions on human rights were imposed, notably on freedom of assembly and expression; political and peace activists were arbitrarily detained and demonstrations were repressed with excessive force, resulting in the death of several people. In 2006, a protest movement (known as the People's Movement) grew and demanded that the King relinquish power. The King decided to reinstate the dissolved House of Representative on April 2006.

On 21 November 2006, a Comprehensive Peace Agreement was signed by the Government of Nepal and the Communist Party of Nepal (Maoist). The newly reinstated Parliament convened to rewrite the country's 1990 Constitution with a view to limiting the powers of the monarchy, ultimately leading to the King quitting the palace in June 2008.

Delayed elections were finally held in April 2008 to elect members of the Constituent Assembly. The Communist Party of Nepal won a majority of seats in the Assembly. In July, however, the Maoists announced they were abandoning efforts to form the country's next government after their candidate for the presidency was beaten by a centrist politician, Ram Baran Yadav.