The present paper deals with the study conducted during 2006-2008 to assess trade pattern of important medicinal plants in Chilime
Village Development Committee (VDC) of Rasuwa district, Nepal. Chilime VDC is one of the important trade centres of medicinal
plants in the district. We documented 60 species of important medicinal plants, including 26 species involved in trade. Among them,
12 most potentially traded species, which have been given high priority by the collectors and traders, were selected for the study
of their market potential and their contribution to the local livelihood. About 40% of the households of Chilime VDC were found to be
involved in the collection and trade of medicinal plants. Most of the collection (90%) was for trade, which has supported up to 40%
of family income contributing average household net profit of NRs 9,000 per year. The local traders were also making a good profit
from medicinal plants with annual net contribution of about NRs 0.25 million per trader. But only 50% of actual traded quantity was
registered at DFO resulting low revenue collection (only 43% of the expected). This shows that illegal trade is a common practice
in the area by which the local traders increase their profit because they do not have to pay revenue. Thus strong mechanisms
should be developed to stop illegal trade of medicinal plants and to promote revenue generation.