The purpose of this study is to investigate the effect of credit risk management on financial performance of commercial banks in Nepal. This study applies the Pooled Ordinary Least Square estimator on balanced panel data of ten commercial banks over the period 2012-2021. The study uses CAR, NPLR, CDR, MQR and BS as credit risk indicators and ROA as financial performance indicator. The study finds that CAR, NPLR, and BS have positive and insignificant effect and negative and insignificant effect of CDR with ROA. Similarly, there is positive significant effect of MQR with ROA. The findings indicate that credit risk management has significant impact on financial performance of commercial banks of Nepal. Therefore, the success of the banks in terms of financial performance depends on credit risk management.