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The Nepali-language film industry, is called Kollywood (or Kaliwood as an alternate spelling) in Nepal. The making of Nepali films is said to have begun with D. B. Pariyar'sSatya Harishchandra, which was the first Nepali language film to be shot. It was produced from Kolkata, India, and was released on September 14, 1951. Aama (meaning mother) was the first film produced in Nepal, and was released on October 7, 1964. It was produced by the Information Department of His Majesty's Government Of Nepal (now Government of Nepal). It was directed by Hira Singh Khatri and the lead actors were Shiva Shankar Manandhar and Bhuwan Thapa, who are regarded as the first actors in the history of the Nepali film industry. The first film to be produced under a private banner was Maitighar (meaning the birth home of a girl), which was released at the end of 1966 by Sumonanjali Films Pvt. Ltd. Although it was a Nepali movie, it had many Indians contributing toward the making of the film. Mala Sinha had the lead role, along with C P Lohani, whom she later married. It had special appearances of Sunil Dutt and comedian Rajendra Nath. Directed by B S Thapa and music scored by Jaidev, a veteran music maestro, it had Lata Mangeshkar, Asha Bhosle, Usha Mangeshkar, and Manna Dey, all of them established Indian singers, doing the playback-singing along with the household names of Nepali music, like Narayan Gopal, Prem Dhoj Pradhan, C P Lohani, and Aruna Lama.

Then the government established the Royal Nepal Film Corporation in 1971. Mann Ko Bandh was the first film produced by the Corporation. Prakesh Thapa was the director of the film. Nati Kaji and Shiva Shankar were the music composers of the songs. Amber Gurung scored the background music. The film premiered in 1973 in Kathmandu. Mann Ko Bandh was followed by Kumari (the first Eastman color Nepali film) in 1977, Sindoor in 1980, and Jeevan Rekha in series. The success of these films opened up avenue for private parties to enter into filmmaking as industrial endeavor.

By 2006, as the situation in Nepal calmed down and with Maoists coming into mainstream politics, the Nepali film industry started to return to its previous state. Now, more and more films are being made and released. The production companies and those in the industry are enthusiastic about the country's new situation. The return of peace in the country has opened more venues for the shooting of the films, and the industry is seen to be making good use of this time to revive the image of the industry.

The Film Development Board (FDB) was established by the Government of Nepal for the development and promotion of the Nepali Film Industry. But recently it has not created an environment of supporting and also the promotion of different aspects of motion-picture production in Nepal. The Board is a liaison to facilitate the conceptualization, making, distribution, and exhibition of Nepali films nationally, it is not able to promote the films in the inter national market and the main thing is that this board is not serious enough to send Nepali films into the international market. It also attempts to bridge the gap between film entrepreneurship and government bureaucracy. However, the Board is bound to take care of interests of the people and support the interest for inspiring films from the common populace. The Board is a balance between the people at large, the government, and the process of filmmaking. It is, therefore, the safeguard of the interests of the people, the watchdog of the government, and the advocate of filmmakers.