The Constitution of Nepal has envisioned fulfilling the aspirations of development, prosperity, and good governance through a federal democratic republican system of governance. Article 232(1) of the Constitution states that the relationship among the Federal, Provincial, and Local levels shall be based on the principles of cooperation, coexistence, and coordination. There is a need to make result-oriented investments through the collaboration of all three levels of government in areas that fall within the primary responsibilities of the state and stimulate the economy, while ensuring the optimum utilization of available resources and means. For this purpose, strategies and programs need to be formulated in a coordinated manner for balanced, sustainable, quality, environment-friendly, and resilient infrastructure development. In this context, with the objective of supporting the aspirations for infrastructure development in the transformed state structure, the Government of Nepal, by its decision dated 32 Ashadh 2075, restructured the former Department of Local Infrastructure Development and Agricultural Roads and established the Department of Local Infrastructure. Likewise, as per the decision of the Council of Ministers of the Government of Nepal dated 19 Shrawan 2079, this department was established as a new department under the Ministry of Urban Development. As per the decision of the Council of Ministers of the Government of Nepal dated 2081/06/21, the name of this department has been maintained as the Department of Local Infrastructure Development.

The department has been working in areas such as developing rural and sub-national infrastructure (local infrastructure); creating an environment where people can continue to live in rural areas with modern facilities despite declining rural populations caused by increasing migration; developing dense interconnectivity along with regional and provincial balance (through programs such as suspension bridges, roads connecting local level centers, local road bridges, development of alternative auxiliary highways, etc.); and mobilizing foreign assistance according to national needs. The department is moving forward with the vision of contributing to the goals of development and prosperity by bridging gaps and inequalities in infrastructure development through strengthened urban-rural linkages that connect infrastructure with production and employment.