Abstract Damage, destruction and casualties related to landslide and debris flow are common phenomena in the Himalaya, especially during the summer monsoon. This fact was tragically illustrated on 22 July 1996, when Larcha, situated at the 109-km mark of the Arniko Highway, upper Bhotekoshi Valley, central Nepal, experienced a catastrophic debris flow powered by the Bhairab Kunda Stream. Of the 22 houses in Larcha, 16 were swept away, two were partially damaged and 54 people were killed in a matter of a few minutes. The event attracted attention when media linked it to a glacial lake outburst flood as a result of the fact that the source of the stream is a glacial lake. To understand the cause, initiation mechanism and deposition process, the basin area was studied from geological, geomorphologic and engineering geological points of view and the role of precipitation was evaluated. A combination of rainfall, runoff from cliff faces and stream undercutting triggered failure of the bedrock and colluvium, both on the dip and counter-dip slopes, 500 m upstream from the highway. The landslide debris dammed the channel, which was eventually breached, and deposited approximately 104 000 m3 of coarse debris, dominated by the metasediments of the Lesser Himalayan origin, and overwhelmed the village of Larcha. The debris deposit was studied for clast size, composition, texture and dimensions. Lack of sorting and the presence of abundant silt and clay in the source area helped in the initiation of debris flow. The abundance of the Lesser Himalayan metasediment clasts together with the absence of debris traces upstream from the landslide site ruled out the possibility of a glacial lake outburst flood. The disaster was a result of landslide damming triggered by precipitation and stream undercutting and sudden bursting.