Deforestation and forest degradation mostly caused by human interventions affects the capacity of forest ecosystem to provide ecosystem services and livelihood benefits. Forest Land Restoration (FLR) is an emerging concept which focuses on the improvement of ecosystem as well as livelihood of the people at the landscape level. Nepal has successfully recovered degraded forest land mainly from the hilly region through forest restoration initiatives especially community based forestry. However, the Terai region is still experiencing deforestation and forest degradation. This study navigated the gaps related to forest restoration in the existing policies and practices and revealed that the persistence of deforestation and forest degradation in Terai is a result of a complex socio-economic structure, limitation of government to implement appropriate management modality, unplanned infrastructure, and urban development. We suggest that forest restoration should focus on ecological and social wellbeing pathways at the landscape level, to reverse the trend of deforestation and forest degradation in the Terai regions of Nepal. The study provides a critical insight to the policy makers and practitioners of Nepal and other countries (with similar context) who are engaged in forest/ecosystem restoration enterprise.