After the 1980s, some relatively more creative films were made and they became successful, too. Thus, filmmaking started to appear as a more viable profession and the number of productions increased a bit. After the introduction of private companies in the Nepali film industry, the time came when more films were being made and they were much more accepted by Nepali audiences. Samjhana, Kusume Rumal, Lahure, Kanchhi, Basudev, Saino and Koseli, which were released between 1984 and 1993, were very popular. The leading actors were Bhuwan K.C. and Tripti Nadakar, whose on-screen chemistry saw them being dubbed the "golden couple" of the industry. In the later years of the decade, the industry saw the rise of Rajesh Hamal and Karishma Manandhar.
In 1990, Nepal witnessed important political change. The people’s movement brought the monarchy to its knees and democracy was restored. The society started to become open and vibrant. This had an important consequence for the fledgling film industry: It began to grow rapidly or even to "bloat". There was an unprecedented growth in the number of productions. Within three years, some 140 films were made. Distribution started to develop. Share in the existing market increased and the market itself expanded. Cinema halls increased to more than 300. Nepali filmmakers became optimistic of displacing Hindi films, which had dominated the Nepali market. The start of the Maoist revolution in Nepal in the mid-1990s was the beginning of the downfall of the domestic film industry. In the period of war and conflict, a very small number of films were made, and audience numbers fell sharply. It resulted in lower budgets and even lower performances, which resulted in even smaller audiences. In the later years of the conflict, the production and release of Nepali films had almost come to a standstill. Many actors and filmmakers left the country in search for work abroad. Actors like Saroj Khanal, Shiva Shrestha, Karishma Manandhar, Tripti Nadakar, Kristi Mainali and Gauri Malla had little work.
During the 1990s, some filmmakers, mostly with non-fiction base, started championing a new kind of cinema. They denounced the crude imitation of Bollywood aesthetics and demanded indigenous aesthetics and a more realistic approach. They made some films which have received some critical acclaim at home and some international recognition. Historic movies like Balidaan and Seema Rekha made during this period were appreciated by critics and audience.
In 2001, the highest-grossing Nepali film Darpan Chaya was made. It was directed by Tulsi Ghimire and starred Dilip Rayamajhi, Niruta Singh and Uttam Pradhan. It earned NRs 7 crore (equivalent to Nrs.15 crore in 2016) at the box office.
By 2006, as the situation in Nepal calmed down and with Maoists coming into mainstream politics, the Nepali film industry started to return to its previous state, and more films were being made and released.