Background Impacted teeth are those that have erupted or are partially erupted and will not assume a normal arch relationship with opposing and adjacent teeth and tissues. Objective To evaluate the incidence and pattern of mandibular impacted third molars in patients of Dhulikhel Hospital. Method A retrospective study was conducted from March 2016 to November 2016 and reviewed 581 orthopantomograms and clinical records of patients who presented to the Department of Oral and Maxillofacial Surgery. The angulation of impaction was measured using Winter's classification and the level and position of impacted third molar was recorded using Pell and Gregory classification system. The etiology for extraction was recorded from previous clinical records. Result In this study, incidence of impaction was more prevalent in females. The most common pattern of impaction was mesioangular followed by horizontal, vertical, distoangular and others. The most common cause of extraction was caries in the third molar. There was no significant difference between the pattern of impaction in the right and left sides of the mandible. Conclusion Classifications of impacted mandibular third molars can be effectively used to predict the surgical difficulty and to evaluate the risk of postoperative complications. Therefore, this study highlights the importance of evaluation of pattern, type and class of impaction in Nepalese population giving a high clinical significance.