Nepal has witnessed a decline in poverty in the last decade, although GDP growth is low and stagnant at around 4 %. What explains this decline is little researched. Descent poverty, or how some households tend to fall into poverty, is another important facet of poverty dynamics, which has also received little scholarly attention. This paper, therefore, examines pathways leading to poverty dynamics in rural Nepal. Employing the ‘Stages of Progress ’ methodology, this paper shows that nearly one-third of the total 386 households studied have escaped poverty, while 7 % have fallen into poverty over the last two decades. Foreign labour migration, small business and access to land define the movement of most households out of poverty, whereas loss of land, cultural burdens and health costs are the main factors associated with descent into poverty. This paper suggests two distinct sets of policies for promoting escape from poverty and for preventing descent into poverty. Such policies need to consider the situation of the poor who are unable to pursue labour migration, and the left behind household members, enabling their access to land and creating local employment.