Empty streets and closed shops – the election took place in a climate of heightened tension.
Authorities insist adequate security was in place to ensure voter safety.
But many people were simply too afraid to cast their ballots amid fears of reprisals by the Maoist rebels.
The polls come just weeks after the guerrillas, who effectively control most of rural Nepal, ended a unilateral ceasefire – since then, violence has risen sharply. At least nine soldiers and policemen have died since Monday in seperate clashes which followed attacks on government troops. Scores of rebels have also been killed.
The country of 26.3 million people has been wracked by violence since the mid-1990s when the Maoists, intent on creating a communist republic, launched a campaign against the monarchy. The rebellion has claimed more than 12,000 lives and displaced an estimated 100,000 people.
The palace claims the municipal elections are the first step towards restoring democracy in the Kingdom, and will pave the way for parliamentary elections next year.
Although democratic politics were officially introduced after popular protests in 1991, Nepal remains under the sway of a hereditary monarchy. Human rights groups denounce the situation there as dramatic.
King Gyanendra ascended the throne in June 2001 after Crown Prince Dipendra gunned down his parents and seven other royals before killing himself.
The King is keen to develop tourism in Nepal, whose main attraction is Mount Everest, the world’s highest summit.
The country, which relies heavily on tourism and foreign aid, is rated one of the poorest in the world. Recent violence has only made the situation worse.