In 1957, the Department of Civil Aviation was formally established under the then Ministry of Work, Communications and Transport of the Government of Nepal. The statutory regulations regarding civil aviation were introduced under the Civil Aviation Act, 1959 (2015 BS). Nepal obtained the membership of International Civil Aviation Organization (ICAO) in 1960.

The Government of Nepal introduced its first ever Civil Aviation Policy in 2050 B.S. (1993 A.D.). This policy made the provision of transformation of Department of Civil Aviation into an autonomous Civil Aviation Authority. Accordingly, Civil Aviation Authority of Nepal (CAAN) was established as an autonomous regulatory body on 31 December 1998 under Civil Aviation Act, 1996. CAAN is the regulator of civil aviation as well as the service provider in the areas of Air Navigation Services and Aerodrome Operations.

The first Civil Aviation Policy introduced in 2050 B.S. led to the establishment of the Civil Aviation Authority of Nepal (CAAN) in 1998 as an autonomous regulatory body.