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Ilam (Nepali: इलाम About this sound Listen (help·info)) is a municipality of Ilam District, which is in the hilly region of Mechi zone, in the Eastern Development Region of Nepal. Ilam also acts as the headquarters of Ilam District and Mechi zone. Geographically it lies in the hill region which is mostly known as Mahabharata range. It is also one of the important town in Mechi zone and one of the major place in Nepal for tea-production. It is famous for natural scenery and landscapes, tea production, and diverse agricultural economy. It is one of the major horticultural crop production districts of Nepal. Ilam municipality is sub-divided in 9 different wards, the major governmental and district office lies in ward number 1 and ward number 2. Ilam also is a major hub for transportation and communication for VDC that lies in the upper part of the discrict.

Tea production in Ilam (as Nepal tea) started as early as 1863, when the Chinese government offered then Prime Minister Jung Bahadur Rana tea saplings that were then planted in Ilam. In 1868, the Ilam tea factory was established, and tea plantations covered over 135 acres of land. In 2010, the tea factory was privatized, and is currently not under operation. However, tea production continues in Ilam in other forms. Many local people gets employment from this.

In 2010, the total tea production of Nepal is 16.23 million kilograms per annum; a majority of this amount is produced in Ilam itself As well as the organic tea transport the foreign country.
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