ABSTRACT: Background:Understanding of risk factors and developing healthy lifestyles is a way of tackling the surging burden of chronic diseases in low-to-middle income countries such as Nepal. Health literacy (HL) has a pivotal role in prevention, adherence to treatment, self-care, and better use of health care; therefore, factors associated with HL need to be studied in the context of Nepal. Objective:This study was conducted to assess the level of HL and explore disease-specific knowledge among patients with chronic diseases. Methods:A cross-sectional study was conducted among 426 respondents with hypertension, diabetes mellitus, or chronic obstructive pulmonary disease from a tertiary care hospital and primary care clinics using face-to-face interviews. HL was measured using a translated and pretested HL questionnaire (the Europe-Asia Health Literacy Survey Questionnaire). Disease-related knowledge was assessed using a validated questionnaire. Key Results:The study found that 27% of the respondents had sufficient HL, 19% had marginal HL, and 54% had inadequate HL. Factors associated with inadequate HL included being older and female, and having lower or no education, unemployment or retired status, poverty, and having a history of smoking or a history of consuming alcohol. HL was a strong predictor of knowledge regarding hypertension (? = 0.32; p < .05), diabetes mellitus (? = 0.41; p < .05), and chronic obstructive pulmonary disease (? = 0.37; p < .05) in multiple regression analyses after adjusting for age, gender, education, marriage, family history of disease, attendance at follow-up clinics at recommended intervals, information received regarding disease at clinics, smoking, and alcohol intake. Conclusions:A sufficient level of HL was uncommon among participants in our study. People with sufficient HL knew significantly more about their diseases or conditions than those with inadequate HL. [HLRP: Health Literacy Research and Practice. 2018;2(4):e221-e230.]. Plain Language Summary:Very little is known about health literacy in Nepal. We conducted a study to learn how much people in Nepal with hypertension, diabetes, or chronic obstructive pulmonary disease knew about their condition and sought to check its association with health literacy. We found that more than one-half of the participants did not have adequate health literacy levels. Participants who were older, female, uneducated, retired from work, or poor had lower levels of health literacy. We also found that those with high levels of health literacy had better knowledge of their disease. Therefore, we recommend that in Nepal health literacy should be measured for each patient and support regarding management of his or her condition should be provided if necessary.