This article examines the contested reception of the Convention concerning Indigenous and Tribal Peoples in Independent Countries (“ILO Convention 169”) in Nepal, particularly in the context of current constitutional reform and post-conflict economic development. Compelling evidence suggests that exclusionary political institutions, laws and structures have been the major cause of exclusion in contemporary Nepal. While Nepal is home to a range of different ethnic, language, religious and caste-based groups, the Adivasi Janajati (around 37 per cent of the population) consider themselves indigenous peoples. With such a sizeable minority, Nepal was the first and so far only Asian country to ratify the ILO Indigenous and Tribal Peoples Convention 169, which has considerable significance in a context of state restructuring and the accommodation of indigenous rights. The form of recognition of indigenous rights in the constitutional drafting process has created much heat, particularly over questions of autonomy and federalism, control over natural resources and land and quotas for political representation, but with less light concerning political consensus. The ILO Convention 169 has figured prominently in this process with various interpretations by different actors. Reconciling international meanings of this treaty with national interpretations used for political purposes in Nepal foregrounds a paradox existing between liberalism (in the form of rights and freedoms) and equality (democracy). Through a range of disciplinary methods, this article analyses the background to indigenous demands, the political and legal contestation over the interpretation of ILO 169 and the specific case of natural resources.