Polls opened in three provinces at 7am (01:15 GMT) on Sunday with nearly 50,000 candidates vying for the position of mayor, deputy mayor, ward chairman and ward member in 283 local municipalities.
The ballot paper in the capital Kathmandu - one of the largest constituencies - was around one metre long to accommodate the 878 candidates.
The vote has been split into two phases because of unrest in the southern plains bordering India, where the minority Madhesi ethnic group is refusing to participate until an amendment to the constitution is passed.
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The remaining four provinces, considered potential flashpoints for election-related violence, will vote in the second phase due to be held on June 14.
Local government representatives were last elected in 1997. Their five-year terms expired in 2002, at the height of the country's civil war, and their mandate was allowed to lapse.
Bureaucrats have since filled those positions, many appointed on the basis of allegiance to the main political parties.
Corruption has flourished, hampering the delivery of basic services - from healthcare to the appointment of teachers at government schools.
The peace deal that ended the decade-long Maoist uprising in 2006 began the impoverished Himalayan nation's transition from a Hindu monarchy to a secular republic.
As part of the accord, a new constitution was written and finally adopted in September 2015, nearly a decade after the end of the conflict.
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The charter mandated that local elections, followed by provincial and then national elections, be held by January 2018 - the final step in the drawn-out peace process.
But the constitution sparked protests by the minority Madhesi community - who say the document leaves them politically marginalised - and led to a months-long blockade of the India-Nepal border that caused a crippling shortage of goods across the country.
The Madhesi community threatened to boycott the local polls unless the constitution is rewritten and forced the government to split the vote into two phases.
The government has promised a vote on an amendment to the constitution after Sunday's election, but the fragile ruling coalition is struggling to get the necessary majority in parliament to pass the bill.