This paper analyses the existing forest resource monitoring system in Nepal with a view to identifying possible issues and challenges for designing and implementing a measurement, reporting and verification (MRV) system for Reducing Emission from Deforestation and Forest Degradation (REDD) projects.The authors, through their understanding of the current policy provisions and institutional infrastructure in Nepal, identify existing gaps for designing and adopting the REDD MRV. The paper emphasises the increased role of existing institutions - a higher cost is incurred in establishing a new structure for REDD+MRV. This observation is discussed in a case study of the central forest monitoring organisation in Nepal, the Department of Forest Research and Survey (DFRS). The analytical focus revolves around understanding the current policy provisions and institutional infrastructure, as well as identifying existing gaps. The authors also analyse the national capacity gaps for designing and adopting the REDD MRV.Finally possible issues and challenges for designing and implementing REDD MRV in Nepal are outlined. Based on all these aspects, an MRV system design is proposed that would acknowledge the role of existing institutions and consider the state restructuring.