This comes a month after Narendra Modi addressed the Bhutan Parliament on his two-day trip to Bhutan.
Modi will be the first foreign minister to address the Nepal Parliament after the democracy was restored in 1990.
PM Modi is likely to offer prayers at the famous Pashupathinath temple. A special prayer will be performed during Modi's hour-long visit and he will take a tour around the temple.
According to reports Modi has expressed his desire to offer prayers at another shrine.
External Affairs Minister Sushma Swaraj is likely to reach Kathmandu on Friday following which she will hold a meeting with Nepal-India Joint Commission.
Narendra Modi will be the first Prime Minister to officially visit the country after 17 years.