Geospatial tools play an important role in monitoring Land Use Land Cover (LULC) dynamics. This study assessed the extent of LULC changes during 2003, 2010 and 2018 using temporal satellite imageries, computed the rate of change in area of Phewa Lake and explored the drivers of LULC change and lake area change in Phewa watershed. It used Landsat Imageries for 2003, 2010 and 2018 and carried out purposive household survey (N=60), key informant survey (N=5), focus group discussion (N=4) and direct field observation to explore the drivers of LULC change and lake area change. It generated LULC maps by using supervised classification and computed LULC change by applying post classification change detection technique. On screen digitization was done to find the area of Phewa Lake during 2010 and 2018. Agricultural land and urban areas were found to have increased by 11.63% and 1.46% respectively while forest area, barren land and water bodies were found to have decreased by 9.21%, 3.56% and 0.5% respectively between 2003 and 2010. Forest area, urban areas and barren land were found to have increased by 5.9%, 3.28% and 5.02% respectively while agricultural landand water bodies were observed to have decreased by 7.83% and 0.16% respectively between 2010 and 2018. During 2010-2018, rate of change in lake area was found to have decreased by 0.61% with periodic annual decrement by 2.59 ha. The drivers responsible for LULC change were alternative form of energy, community forestry, promotion of private forestry, migration for foreign employment, inadequate market price of agricultural products, road construction, soil erosion and population pressure. Lake area was found to have decreased due to sedimentation, encroachment and road construction. Further study is important to know the exact contributions of these drivers of LULC change and lake area change for the sustainability of Phewa watershed.