BACKGROUND AND OBJECTIVES: Visceral leishmaniasis (VL) is an important public health problem in south-eastern Nepal affecting very poor rural communities. Since 2005, Nepal is involved in a regional initiative to eliminate VL. This study assessed the economic impact of VL on households and examined whether the intensified VL control efforts induced by the government resulted in a decrease in household costs. METHODS: Between August and September 2010, a household survey was conducted among 168 patients that had been treated for VL within 12 months prior to the survey in five districts in south-eastern Nepal. We collected data on health-seeking behaviour, direct and indirect costs and coping strategies. RESULTS: The median total cost of one episode of VL was US$ 165 or 11% of annual household income. The median delay between the onset of symptoms and presentation to a qualified provider was 25 days. Once the patient presented to a qualified provider, the delay to correct diagnosis was minimal (median 3 days). Direct and indirect costs (income losses) represented 47% and 53% of total costs respectively. Households used multiple strategies to cope with the cost of illness, mainly mobilizing cash/savings (71%) or taking a loan (56%). CONCLUSIONS: The provision of free VL diagnosis and drugs by the Nepalese control programme has been an important policy measure to reduce the cost of VL to households. But despite the free VL drugs, the economic burden is still important for households. More effort should be put into reducing indirect costs, in particular the length of treatment, and preventing the transmission of VL through vector control.