The first written evidence of weaving in Nepal is in the Indian sources of the Asoka period in the second century AD. The Arthasastra refers to Nepali blankets sold in Kautilyas. The description of the blankets in the book says that there were eight small parts sown together to form a whole, black in color, waterproof and called Bhingisi. Another book, Apasarka, of about the same time describes the same woolen blankets sold in Pataliputra (which is now known as Patna in India). By the third century this trade appears to have been well established between Kathmandu and Pataliputra. Textile in Nepal seems to have been developed before the Indian influence entered the country with pilgrims and traders from the South.

Chinese pilgrims who followed the paths of Buddha also reported to Hiuen Tsiang in 629 that Nepalese artistic skills were appreciable. By saying arts it should have also included weaving which was practiced in almost every house to fulfill their need for warmth.

The blankets mentioned in these ancient books most probably refer to radi, which are still being produced in the Himalayan region of Nepal. These radi are used as blankets against cold and rain. The black color mentioned in the writings would have referred to the wool of yak or bhatuwal sheep found in the Himalayan region. Bharuwals are hardy mountain sheep found in the Himalayas and produce thick wool.

From early statues like that of Yaksha from the first century evidence is found of the dress worn in that time. It is a simple long cloth, probably cotton, covering the body. At that time, these cloths were homespun. These dhakas are made of different colored cotton fibers weaved in various patterns. The dhaka clothes were cut and made into caps for men and blouses and shawls for women. The dhaka topi cap was a substitute for the traditional black topi worn mostly by Newars in Kathmandu. The popularity of the dhaka topi increased amongst the people of Nepal to the extent that it was promoted to the national dress of the country. Dhakas were also made in Palpa in the Western hilly region and are thought to have developed the finer examples than those in other regions.

During the ninth century the woven clothes were used to cover religious manuscripts to protect them from dust and decay. Clothes were also used for thangka and other religious paintings. Most of them were painted on cotton cloth while more expensive and valuable ones were created using silk.

In 1722, Father Ippolito Desideri wrote in his description about people in Nepal that they wore long clothes that fell to the ankles. They had trousers and slippers made of straw. Even today straw slippers are seen in the Kathmandu Valley, worn mostly by the Newars during festivals and marriage ceremonies. Later, in 1811, Kirkpatrick commented in his notebook about the coarse cotton, hemp sackcloth, and rug trading within the region. Clothes have been known by different names in the communities of Nepal. Coarse cotton cloth like khadi and chana were used by middle and lower class people in the central hilly region, while upper class people used imported cloths like finer Chinese and Tibetan cotton and silk. Magars, who primarily resided in the hills, also used these kinds of cloths for weaving.

In Jumla, in the Northern mountain region of Nepal, the woolen rug they produced from yak wool was known as pheruwa. The Bos gruniens species of yak produces the best wool. Sheep wool was also preferred and was known as kachar. These rugs would have been similar to the type of woolen rug mentioned in Indian sources to have been brought down to Pataliputra for trade. The coarse cotton cloths in this area were called kharun while the lighter, finer ones were known as chourput. The people in this region used a wooden stick spindle known as a phan which made it possible for women to spin the wool while walking. Similar stick spindles known as taraps were used in Dolpo, another settlement in the Himalayas in the Northern mountain region of Nepal. However, taraps had small bowls to help the sticks rotate. Gurungs in the hilly region used charka, a wooden spinning wheel, for the same purpose.

One of the best known and widely produced weavings in Nepal is pashmina. There is no evidence that reveals when its production and use began. "Pashm" means wool in the Persian language. Cashmere was derived from the shawls sold in Kashmir to the West of Nepal. But the weavers in Kashmir made the shawl while the people from the mountain region of Nepal sold them the wool they needed. The same wool was used to make pashmina in Nepal. This wool is taken from a species of goat, Capra hircus, which is found in Central Asia and along the Himalayan region. The wool from this species is said to be better than the finest merino wool. However, the best shawls were made of silk and there are many records of silk being used by kings of the region from its early history. Silk fiber is affected by what moth and butterfly larvae feed upon. Best quality silk is made by Bombax mori feeding on mulberry leaves.

Another type of raw material mostly used in villages is the stem fibers of nettle plants. It is said that Milarepa, a highly regarded Buddhist monk, who preached Buddhism across Tibet and Nepal (what years) was also dressed in simple clothes made of nettle fibers. The stems of this plant are collected after the monsoon up until spring and only the outer layering of the stem is used. Hindus giant nettle, locally known as allo and scientifically as Girardinia diversifolia is the best type for fibers.

Dyes have been an essential part of weaving. For the weaving of rugs, only white wools were dyed while black wools were considered valuable and used in its natural color. From early times, dyes were extracted from natural herbs and minerals. Madder, Rubia cardifolia, a climbing plant is one of the most valued plants. It is possible to extract different shades of red like deep red, light pink, and orange from this plant. Rhubarb is also used as well as indigo, walnut, sorrel, and barberry, Barberis asiatica. These plants have been used since early times and handed down through generations of weaving families and are still being used to dye rugs and fibers.

The well known carpet making tradition entered Nepal only in 1959 along with around 15,000 Tibetan refugees who fled to the country. The Tibetan-Nepalese carpet making industry started with this group of Tibetan weavers and remained small up until it was revealed to the West and flourished in the years that followed. In 1961, the Swiss organized Jawalakhel Handicraft Center was formed and soon became the focus of carpet making in Nepal. The master weavers from Gyantse, the best carpet making area of central Tibet, who settled in Nepal eventually taught their skills to others resulting in an increase in production of better carpets. The hand spun wool, high quality dyes, and Tibetan designs produced carpets that would soon grow into a major industry in the country. The Swiss again helped in marketing by generating a market in Europe and promoting the art there as well as establishing system of design with graph paper to produce uniformity. Then carpet weaving industry spread around Nepal where Tibetan refugees had settled, especially inside the Kathmandu Valley. By mid 1970, the business was firmly established and continues to grow today.