Wood waste has the potential to be used in making a variety of goods, including engineered wood products, energy generation (heat and electricity), mulching, and animal bedding. These inexpensive and underutilized feedstocks have the potential to increase the added value of wood wastes. This paper aims to review the different possibilities on wood waste utilization and their prospects in Nepal. This information helps to find the proper way for future development of wood waste to deliver the best outcomes for the environment and economy. The review is based on an in-depth examination of credible literature and official statistical data. The study showed Nepal has not utilized wood waste except for firewood and a few engineered wood products. The problem with wood waste is the lack of adaptation of advanced technologies and the lack of institutions concerned with the benefits of utilization of those waste. This review concludes that wood waste can be a potential source for the production of different materials but the government should develop effective waste management rules to maximize the value of wood waste resources.