The aims of this study are to identify implementation of policies on ICT in teaching and learning activities, and challenges in the implementation of educational technology in a Nepalese higher education context. This study provides insights on understanding how policies concerning technology are implemented in this national context and what challenges are faced in the sector of higher education in this developing country. Empirically, the study applies a qualitative approach and a case study research design in order to investigate and collect detailed, comprehensive information on challenges faced in the use of educational technology in a selected educational institution in Nepal. The study is methodologically based on a combination of document analysis and interviews. The interviews are conducted to elicit views of leadership, teachers and students. Relevant official documents are examined. The physical infrastructure of this case-context is presented as a supplement to the findings from interviews and document analysis. The data are analysed and interpreted from the perspective of Cultural-Historical Activity Theory (CHAT) developed by Leonti’v (1978, 1981) and further elaborated and expanded by Engeström (1987). The results indicate that lack of infrastructure is a main challenge. Moreover, the lack of plans and strategies for technology use also seems to emerge as a challenge. In addition to this, the observed case institution is facing challenges related to teacher motivation. Finally, based on these major findings, the study recommends the institution to start formulating strategic plans in line with higher education policies and ICT policies in order to monitor and follow up the incentives given by the ministries. In addition, a more supportive infrastructure needs to be developed for technology use in order to successfully implement technology in teaching and learning activities.