Land use and land cover (LULC) robustly influence the delivery of the ecosystem services that humans rely on. This study used Kathmandu Valley as a study area which is a fast-growing and most vulnerable city to climate change. Remote sensing and GIS methods are the most significant methods for measuring the impact of LULC on the ecosystem service value (ESV). The satellite-based dataset was used for quantitative assessment of the LULC and ecosystem service value for 10-year intervals from the year 1989 to 2019. The result revealed that the area of forest cover, cropland, and waterbodies decreased by 28.33%, 4.35%, and 91.5%, respectively, whereas human settlement and shrubland increased by more than a hundred times and barren land by 21.14% at the end of the study period. This study found that Kathmandu valley lost 20.60% ESV over 30 years which dropped from USD 122.84 million to USD 97.54 million. The urban growth and extension of agricultural land to forest cover areas were found to be contributing factors for the reduction in ESV of Kathmandu valley. Cropland transformed into shrubland, bringing about an increase in ESV of some areas of the study region. In conclusion, the aggressive increase in population growth with inadequate urban planning and fragmentation of farmlands influenced the ESV of Kathmandu valley.