Background Unregulated antimicrobial use is common in both hospital and community settings of low- and middle-income countries (LMICs). However, discrete data regarding the use/misuse of antimicrobials at pharmacies in LMICs are limited. This study was conducted to understand knowledge, attitude, and practice of pharmacy employees on antimicrobial dispensing in Nepal. Methods We conducted a cross-sectional survey using a structured questionnaire on 801 pharmacy employees working in community and hospital pharmacies located in Lalitpur metropolitan city (LMC) of Kathmandu, Nepal between April 2017 and March 2019. Results A majority (92%) of respondents agreed that demand for non-prescription antimicrobials was common. Asking for prescription before dispensing was ranked as the first preference by majority (69%) of participants. Suspected respiratory tract infection was the most common reason demanding for non-prescription antimicrobials with the highest mean rank of 1.5. Azithromycin was the most commonly prescribed and sold antimicrobial, as reported by 46% and 48% of participants respectively. A majority (87%) of respondents agreed on antimicrobial resistance (AMR) to be a global public health threat; and misuse/overuse of antimicrobials was perceived as the most common cause of AMR with a mean rank of 1.93. Conclusion Our study revealed that unfounded dispensing and use of antimicrobials is prevalent among pharmacies in Kathmandu, Nepal. This over reliance on antimicrobials, notably azithromycin, may escalate burden of AMR. We identified several drivers of inappropriate antimicrobial dispensing practice in pharmacies, which will aid public health authorities in addressing these issues. Further studies considering role of other stakeholders, such as doctors, veterinarians, general public, and policy makers are required to obtain a more holistic perspectives on practices of antimicrobial use so to curb the extant AMR crisis.