This research paper aims to conduct a comprehensive evaluation of the financial soundness and performance of commercial banks in Nepal through the application of the CAMELS analysis framework. The CAMEL framework, which encompasses Capital adequacy, Asset quality, Management quality, Earnings capability and Liquidity position, serves as a systematic approach to evaluating the overall health and stability of financial institutions. By applying this framework to the commercial banks in Nepal, this study provides valuable insights into the strengths and weaknesses of the banking sector in the country. In this study, a quantitative, descriptive and analytical research design is adopted to conduct the CAMEL analysis of commercial banks in Nepal. This study is based on secondary data collected from published financial reports, annual statements, and regulatory filings of commercial banks in Nepal. A purposive sampling method has been used to select a representative sample of commercial banks in Nepal. CAMEL analysis of commercial banks in Nepal revealed a positive assessment of financial soundness. Most banks demonstrated satisfactory performance across the components of the framework, indicating a generally healthy and stable banking sector. However, there were specific areas of concern, especially for smaller banks, which require closer monitoring and targeted regulatory interventions. The findings can be utilized by policymakers, regulators, and industry practitioners to make informed decisions, address vulnerabilities, and strengthen the overall financial stability of the banking sector in Nepal.