Using a dataset of 3,750 children in Karnali zone and econometric models, the study investigates the association between the actual amount of the Child Grant (CG) received and nutritional status of children in Karnali zone, Nepal. It was revealed that higher amount of CG is associated with reduction in underweight and severe wasting. For instance, the prevalence of underweight decreased from 42.5 per cent for non-recipients to 34.5 per cent for children who received the full amount of CG, a decrease by 8 percentage points (18.8 percent). Further, the model projects that, if the amount of CG increases to NRs 500(USD $5) per month from the current NRs 200 (USD $2), the prevalence of underweight will decline to 23.8 per cent. Based on the findings, this study suggests scaling-up the CG, as well as increasing the benefit amount to improve child nutrition in Nepal.