Land use and land cover change has an immense impact on the global environment and ecosystem and is mostly connected with human activities such as conversion of forest into agricultural land and settlements. Forests are changing globally in quantity and quality, and in both increasing and decreasing trends. For the Birendra Nagar Municipality, this study evaluated LULC dynamics, the conversion of forest cover from 2000 to 2020, as well as community perceptions on forest cover change, its drivers. Landsat images of 2000 and 2020 were used for LULC dynamics and for forest cover change detection Using software GIS 10.8. Questionnaire survey, key informant survey, field observation and secondary data were acquired from journal articles, reports, District Forest office, books, and various other sources to find out drivers of forest cover change and perception of locals. It was found that 1146 ha of forest area, 280.53 ha of water bodies, 752.62 ha of barren land were lost between 2000 and 2020. However, 1147.74 ha of settlement area and 1032.40 ha of agricultural land was gained.Net forest cover decreased overall by 4.67%, however, some areas within the municipality experienced an increase in forest cover namely Ward 11 and ward 16 of Municipality shows Highest positive and Negative Forest cover change in terms of Area. Expansion of agriculture land and settlements with the encroachment of forest area, haphazard infrastructure development, illegal timber harvesting and low regeneration capacity of land responsible for the reduction of forest, along with Community forestry approach, plantations programs, promotion of agroforestry practices, fuel transition were responsible drivers for improvements of forest cover. Water cycle disruption, Increases Natural hazard, Temperature rises, shortage of wood for fuel, extinction of indigenous species were the most perceived negative impacts of the forest cover reduction whereas income generation Activities, support biodiversity, easy to collect fuel wool and fodder and others including purifying air quality, increasing aesthetic beauty were the most perceived positive impacts of the forest cover improvement in the study area. Most of the locals have a holistic understanding of forest cover change. Strengthening forest protection, improving soil and water conservation structures, awareness creation, enrichment planting, Promote Alternate Energy Resources and Equitable benefit-sharing mechanism are possible solutions perceived by locals.