Prime Minister Pushpa Kamal Dahal failed to secure a vote of confidence in Parliament on Friday.
He managed to garner only 65 votes.
A total of 194 members voted against the confidence motion while a member stayed neutral.
The Parliament meeting was attended by 258 lawmakers.
Speaker Devraj Ghimire announced that the vote of confidence sought by Prime Minister Dahal was rejected.
Thirty-two lawmakers of the CPN (Maoist Center), 21 of Rastriya Swatantra Party and 10 of CPN (Unified Socialist) voted in favor of Prime Minister Dahal.
Nepali Congress, CPN-UML, Rastriya Prajatantra Party, Janata Samajbadi Party Nepal, Janata Samajbadi Party, Janamat Party, Democratic Socialist Party and Nagarik Unmukti Party voted against PM Dahal.
PM Dahal sought a vote of confidence as per Article 100 (2) of the Constitution of Nepal after the UML withdrew support extended to the government.