Sport’s positive impact on socioeconomic development is well documented in the literature. The theoretical foundation of sport as a vehicle for social change is also strengthening together with the global growth of sport for development and peace (SDP) organizations. However, local SDP organizations in the least developed countries (LDCs) have rarely been studied. It is also not clear how related public policy is evolving in such countries. This paper is an attempt to narrow this research gap by exploring the grassroots ‘youth and sport’ non-governmental organizations (NGOs) in Nepal and government SDP policy (if any). We found the proliferation of the ‘youth and sport’ NGOs since 1990 contributing to peace and development of the nation in many ways although the policymakers failed to introduce any organized SDP policy. Thus, we suggest further in-depth research on this topic and formulate a comprehensive SDP policy to develop a well-functioning SDP sector in Nepal.