There is wide variation of family planning services use among ethnic groups in Nepal. Despite three decades of implementation the need for family planning services is substantially unmet (25%), and there have been no systematic studies evaluating the impact of the family planning program. This study pooled data from nationally representative surveys conducted in 1996, 2001, and 2006. Multilevel logistic regression analysis of 23,381 married women of reproductive age nested within 764 clusters indicated that Muslims, Janjatis, and Dalits were significantly less likely to use contraceptives than Brahmins and Chhetries (OR=0.27, 0.88 and 0.82 respectively). The odds of using contraceptives by the Newar were higher than the odds for Brahmins and Chhetries, although it was not significant. Exposure of women to family planning messages through health facilities, family planning workers, radio, and television increased the odds of using modern contraceptives. However, the impact of family planning information on contraceptive use varied according to ethnicity. We also found that modern contraceptive use varied significantly across the clusters, and the clusterlevel indicators, such as mean age at marriage, mean household asset score, percentage of women with secondary education, and percentage of women working away from home, were important in explaining this.