Nutraceuticals are garnering increased interest among people throughout the world at the present time. Although the consumption of functional foods has taken place since the Ayurvedic era, the term ‘nutraceutical’ has only been coined recently. With the growing nutraceutical market and its impact on population health, regulation of these food products is warranted. There are different regulatory requirements for nutraceuticals throughout the world. In Nepal, nutraceuticals are regulated by the Dietary Supplement Guideline published by the Ministry of Agriculture and Livestock Development. This Guideline aims to protect the health of the consumer and uphold service to the customer by controlling and assuring the stated composition and purity of the nutritional supplementary food, along with defining quality standards, as stated in the preamble of the Guideline. Functional foods are subdivided into six different classes; these are controlled in terms of production, sale, export and import within the territory of Nepal by this Guideline. Even though there are strict laws, unnecessary prescription of nutraceuticals for financial benefit and the sale of unauthorized herbal formulations and nutraceuticals by street vendors are still common practices. We believe the Nepalese authorities should make a greater effort to halt such practices.