Sustainable building design has gained rapid interest to achieve lesser environmental impacts through man-made structures. Guidelines have been set up by the leading developed nations to balance the environment and human needs with sustainable building design guidelines. This is even more necessary for under developed nations like Nepal, with its burgeoning capital city, Kathmandu. In this thesis, the environmental issues in Kathmandu ranging from water, energy, waste management to land management have been studied widely and especially relating to the residential buildings. After the analysis of facts and hard issues faced by the people of Kathmandu and a study of climatic conditions in the city, residential sustainable design guidelines have been proposed. Finally, the design recommendations have been developed in this thesis and applied to multilevel multi-family sustainable residential building in a site in Kathmandu.