The Himalaya region of Nepal provides a habitat for the endangered snow leopard (Panthera uncia) and its principal prey species, the blue sheep (Pseudois nayaur). The aim of this study was to describe the habitat, the distribution and the population structure of blue sheep, and to estimate their contribution to the carrying capacity of snow leopard in the upper Mustang region of Nepal. Blue sheep were recorded at altitudes from 3209–5498 m on slopes with gradients of 16–60° and aspects of 40°NE to 140°SE. A total of 939 blue sheep were counted in the upper Mustang region, and 98 were counted in the Yak Kharka region of Manang district; however, upper Mustang had the lowest population density of blue sheep recorded within their distribution range in Nepal (0.86 blue sheep/km2). The results of the study show that a higher density of blue sheep is associated with greater plant species diversity. The most important species present in the blue sheep habitat were Kobresia pygmaea, Artemesia spp., Lonicera spp., Lancea tibetica, Poa spp., Astragalus spp. and Ephedra gerardiana. It is estimated that the existing blue sheep population biomass of approximately 38 925 kg in the upper Mustang region could support approximately 19 snow leopards (1.6 snow leopards/100 km2).