This exploration of challenges and barriers to inclusion in Nepal elaborates a conceptual framework for education development in a diverse society. As Nepal is a highly diverse, caste-based, multi-ethnic, and multi-linguistic society with very low development indicators, the article focuses on barriers to education and related issues across different socioeconomic groups. A systematic review of the relevant literature forms the basis for the design of a practical approach to education development for this diverse society in light of education policy trends in Nepal since 1950. The five proposed steps for education policy formulation and implementation include an in-depth analysis of the existing situation and outcome assessments. The proposed approach will enable local governance institutions to design and implement pragmatic provisions for education development at local level in the context of a new constitution that mandates local government management of school education.