The flag was adopted after Prithvi Narayan Shah unified all small principalities of Nepal. In modern times the concept of the flag has changed to have a different meaning. The blue border symbolizes peace and harmony. The crimson red is Nepal's national color, and it indicates the brave spirits of the Nepalese people. The two triangles symbolize the Himalaya Mountains. The depiction of celestial bodies represents permanence, the hope that Nepal will last as long as the sun and the moon.

The moon symbolizes that the Nepalese are soothing and calm, while the sun symbolizes fierce resolve. The moon also symbolizes the shades and the cool weather of the Himalayas, whereas the sun symbolizes the heat and the high temperature at the lower part (Tarai) of Nepal. Another interpretation: The flag's shape could also symbolize a Nepalese pagoda – as noted by local Nepalese, placing a mirror at the hoist side will generate an image of a pagoda.