Indoor air pollution (IAP), especially through the smoke released when burning solid biomass fuel for cooking, is a major environmental health problem in Nepal. About 85 percent of Nepalese households are dependent on solid biomass fuels for cooking energy. Among households using such fuels, most cook in poorly ventilated kitchens using inefficient stoves, leading to indoor air pollution and consequently health problems. While there are successful technologies/interventions which help to mitigate IAP, due to lack of evidence on the economic viability of such interventions, they have not been adequately scaled up. This study generates some evidence on the costs and benefits of a particular indoor air pollution control initiative. Based on a survey of 400 households in Rasuwa district, Nepal, the study finds that stove improvements and a smokehood in the kitchen can reduce the consumption of fuel, improve air quality and reduce the health costs borne by households. Such local interventions can also contribute to mitigating global problems such as the release of green house gases through biomass burning. This study finds that the average indoor air pollution level in traditional stove user households is 15 times higher than the recommended safe level which inevitably leads to high health expenditures. The benefit-cost analysis suggests that the investment in IAP mitigating intervention is viable from both the household and societal perspectives.