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This paper provides a comprehensive and comparative analysis of extreme precipitation patterns from 1971 to 2015 in Nepal, a data scarce, but "hot spot" region in global climate change. We compare in‐situ observations and gridded precipitation data from the Asian Precipitation Highly Resolved Observational Data Integration Toward Evaluation of Water Resources (APHRODITE). Using 11 precipitation indices, we show that high‐intensity (RX1day, R95pTOT, R99pTOT) and frequency‐related indices (R10 mm, R20 mm) have decreased but annual maximum consecutive dry and wet days have increased. Observations affirm these trends found by the APHRODITE, but show smaller magnitudes likely due to differences in measurements at locations made below the 3,000 m elevation line. Spatially, the relatively dry western region has become wetter, and the relatively wet eastern region has become drier post‐2003. The weakening of the South Asia Monsoon circulation, particularly assessed by the Webster and Yang Monsoon Index, correlates strongly with extreme precipitation indices. Changes in upper‐level jet and associated lower‐level monsoon trough are identified as critical factors influencing the extreme precipitation trend post‐2003. This study is the first to confirm the efficacy of APHRODITE in providing spatial and temporal precipitation patterns in a data‐limited region. We conclude that monsoon weakened circulations and changes in regional wind fields play dominant roles in the long‐term temporal and spatial trends of extreme precipitation in Nepal. The reduced precipitation extremes in the wet eastern region may somewhat lessen severe flooding and erosion, but the drier western region may face heightened risks in precipitation‐related hazards in Nepal. Plain Language Summary: Precipitation is one of the most important components of the Earth's water cycles but is least predictable locally amid global climate change. Understanding the historical dynamics of extreme precipitation provides critical information for developing climate mitigation and adaptation strategies. This paper examines extreme precipitation patterns in Nepal from 1971 to 2015. Comparing observations on site and Asian Precipitation Highly Resolved Observational Data Integration data, the study identifies decreasing intense and frequent rainfall and increasing prolonged precipitation. On‐site data show similar trends to the integration data, but have smaller magnitudes. Post‐2003, the west and the east tend to get wetter and drier, respectively. The study links these changes to a weakened South Asia Monsoon circulation, particularly indicated by the Webster and Yang Monsoon Index. The shift in upper‐level jet and lower‐level monsoon trough are identified as key factors influencing extreme precipitation trends post‐2003. This study validates APHRODITE in data‐limited regions. The findings suggest that weakened monsoon circulations and changes in wind patterns significantly contribute to long‐term trends in extreme precipitation in Nepal. While reduced extremes in the wet eastern region may imply decreased flooding risks, but the drier western region may face increased hazards and ecosystem changes related to precipitation. Key Points: From 1971 to 2015, extreme precipitation events decreased in Nepal overall, with the west getting wetter and the east drier post‐2003The APHRODITE gridded reliably reproduces Nepal's extreme precipitationChanges in precipitation are the results of variations in monsoon intensity and shifts in wind patterns [ABSTRACT FROM AUTHOR]