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Background: Inequality in maternal healthcare use is a major concern for low-and middle-income countries (LMICs). Maternal health indicators at the national level have markedly improved in the last couple of decades in Nepal. However, the progress is not uniform across different population sub-groups. This study aims to identify the determinants of institutional delivery, measure wealth-related inequality, and examine the key components that explain the inequality.Methods: Most recent nationally representative Multiple Indicator Cluster Survey (MICS) 2019 was used to extract data about married women (15-49 years) with a live birth within two years preceding the survey. Logistic regression models were employed to assess the association of independent variables with the institutional delivery. The concentration curve (CC) and concentration index (CIX) were used to analyze the inequality in institutional delivery. Wealth index scores were used as a socio-economic variable to rank households. Decomposition was performed to identify the determinants that explain socio-economic inequality.Results: The socio-economic status of households to which women belong was a significant predictor of institutional delivery, along with age, parity, four or more ANC visits, education status of women, area of residence, sex of household head, religious belief, and province. The concentration curve was below the line of equality and the relative concentration index (CIX) was 0.097 (p < 0.001), meaning the institutional delivery was disproportionately higher among women from wealthy groups. The decomposition analysis showed the following variables as the most significant contributor to the inequality: wealth status of women (53.20%), education of women (17.02%), residence (8.64%) and ANC visit (6.84%).Conclusions: To reduce the existing socio-economic inequality in institutional delivery, health policies and strategies should focus more on poorest and poor quintiles of the population. The strategies should also focus on raising the education level of women especially from the rural and relatively backward province (Province 2). Increasing antenatal care (ANC) coverage through outreach campaigns is likely to increase facility-based delivery and decrease inequality. Monitoring of healthcare indicators at different sub-population levels (for example wealth, residence, province) is key to ensure equitable improvement in health status and achieve universal health coverage (UHC). [ABSTRACT FROM AUTHOR]