The Nepal–Britain Treaty of 1923 represented a pivotal moment in the diplomatic relations between the United Kingdom and Nepal. The treaty was signed against a backdrop of evolving geopolitical dynamics in South Asia, particularly following the British annexation of territories and the establishment of suzerainty over the Indian subcontinent. The earlier Treaty of Sugauli, signed in 1816, had imposed significant restrictions on Nepal's international relations and territorial integrity following the Anglo-Nepalese War. In contrast, the new treaty aimed to rectify this by affirming Nepal's sovereignty and independence from excessive British influence.

Negotiations were spearheaded by Sir William Hurd Hastings, the British envoy to Nepal, alongside prominent Nepalese officials. The treaty essentially delineated the nature of future interactions, encouraging trade, cultural exchanges, and mutual assistance in various domains. Notably, it recognized the importance of Nepal as a buffer state between British India and emerging powers to the north. The British colonial administration viewed a stable and friendly Nepal as crucial for maintaining security in the region, especially with the presence of various political movements and ideologies gaining traction.

The treaty not only reinstated diplomatic avenues but also allowed for greater engagement in economic activities, potentially enhancing Nepalese trade with India and Britain. The impact of the agreement reverberated through subsequent decades, guiding foreign policies of both nations and shaping the landscape of Nepal's later interactions within the global context, especially in pre-World War II dynamics. Discussions and collaborations stemming from this treaty paved the way for deeper bilateral ties in the future, although challenges presently remained.