Potato (Solanum tuberosum L.) is a major food crop which has a high contribution on food security as well as acts as a major source of income of Nepali farmers. It is also a major cash crop of Sindhupalchok district. To assess and analyze the economics of potato production in Sindhupalchok district, this study was conducted in two municipalities (Chautarasangachokgadi and Balephi RM) of Sindhupalchok, Nepal, where most of the farmers were involved in potato farming. Total 150 potato farmers were selected using simple random sampling technique. A semi-structured questionnaire was administered to collect the primary data. The result shows that the average production per household was 3,951Kg and 7,738.3Kg of Balephi and Chautarasangachokgadi Municipality, respectively. Moreover, the average productivity of potato was found to be 13,546.96 Kg/Ha with a statically significant yield gap between Chautarasangachokgadi (19,355.62 Kg/Ha) and Balephi Rural municipality (7,738.30 Kg/Ha). The average gross margin of potato was NRs. 12,737.8/ropani and the average benefit cost ratio was 1.68. The highest farm gate price was reported to be NRs. 23/Kg and highest selling price of retailer was reported to be NRs.35/Kg, where the average marketing margin was NRs.11/Kg. The study showed a statistical significant difference in variable costs between municipalities because of different level of input usage, particularly in the utilization of labor and fertilizer. According to the Cobb Douglas model, the coefficient of labor was negative while the coefficients for tractors, tubers, fertilizers, and manures were positive. The return to the scale was found to be 1.03, which means there was growing returns to scale. Findings revealed that timely unavailability of fertilizer, lack of irrigation facilities, pest problems and fragmented land holding were the major problems for the production of potato and access to national market , variation in climatic condition, fertile land and improving infrastructure were the major strength for potato production in study area.