Abstract: Dalits of Nepal are denying from their good livelihood, educational opportunities, social inclusion and political presence. Furthermore, they are suffering from the discrimination from all aspects like social, cultural, political, educational, health and religions. Such discrimination and disadvantage lead to the livelihood insecurity of the Dalits and harm their constitutional rights as, “All citizens shall be equal before law. No person shall be denied the equal protection of law”. In this context, this paper is based on a survey research design and 390 respondents were selected by stratified random sampling method. Study was conducted on Kusma Municipality of Parbat district of Nepal. The status of composite livelihood capital is below than 50% and some variables of physical, human and financial capitals are equally with national average but other capitals; social, natural capitals are very few. So, because of low capabilities and not favorable structure and institutions leading the livelihood insecurity of the Dalit community and which become the major challenge of development agenda.