The provision of ecosystem services is directly related to the type of land use and land cover and management practices in a given area. Changes in land use and land cover can alter the supply of ecosystem services and affect the well-being of both humanity and nature. This study analyses the spatiotemporal variations of land use and land cover and quantifies the change in three important ecosystem services (food production, carbon storage, and habitat quality) in the Koshi River Basin, Nepal during 1996–2016 by using freely available data and tools such as, Landsat satellite images and the Integrated Valuation of Ecosystem Services and Trade-offs (InVEST) model. During the observed time period, there was an overall gain in urban areas (190 sq.km), forests (773 sq.km) and grassland (431 sq.km); loss of cultivated land (220 sq.km) and shrub lands (847 sq.km), mostly occurring in the lowlands (≤1000 m). As a result of the land cover changes, while food production and carbon storage showed a declining trend, overall habitat quality in the basin increased. There is a need to design novel and effective landscape approaches that address local realities and that will aid the maintenance of ecosystem services. We recommend landscape level planning to improve urban and agricultural sectors and focus on halting the loss of ecosystem services.