The idea of establishing a model school that would provide quality all-round education to meritorious students coming from every walk of life in an environment that fosters unity in diversity was conceived in 1964. The idea was initiated by the Late King Mahendra in consultation with the then British Council representative, Lynndon Clough.
After much planning and forethought, Budhanilkantha School came into existence in 1972. As a joint venture between the Government of the United Kingdom and the Government of Nepal, the Nepali government provided the required land and the British government provided all the technical and financial assistance.
Teaching started in 1973 with one building, 82 students (all boys) and about a dozen teachers. The same building served as the hostel, the cafeteria and the classrooms. The construction of other buildings (hostels, classrooms, dinning hall, assembly hall, sports hall and staff quarters) was completed by the end of 1978. Peter J. Wakeman became the first Headmaster of Budhanilkantha School and Mr. Ratna Bahadur Tamot and Mr. Gehendra Man Udas were the first Nepali personel to be appointed as teachers.