This paper examines determinants of the export performance of Nepal, a landlocked developing country, within the standard gravity modelling framework. Given the high trade cost resulting from landlockedness, Nepal seems to do better in exporting high-value-low-weight products. The results indicate that real exchange rate appreciation, transportation costs and political instability are the significant causes of poor Nepalese exports. The results suggest for paying attention to the adverse implications of the current practice of pegging the Nepalese rupee to the Indian rupee for the diversification of exports to third country markets. Narrowing the tariff differential with India may help to increase Nepal’s exports by reducing the trade smuggling. Given the trade costs inherent to landlockedness, export development policy of Nepal needs to focus on high-value-toweight products.