Background Parental knowledge about sexual and reproductive health issues and adequate communication with their adolescent on these issues are crucial in promoting adolescent sexual and reproductive health. Although there are evidence on adolescent perceptions of their sexual health issues, research on parental perspectives of adolescent sexual health and parent-adolescent communication about sexual health issues in Nepal remains unexplored. Therefore, this study aimed to assess parental knowledge and communication practice about sexual and reproductive health with their adolescent children in Lalitpur Metropolitan City of Nepal. Methods A community-based cross-sectional study was conducted between January and March 2019 among randomly selected 308 parents of adolescents (aged 10–19 years) residing in Lalitpur Metropolitan City of Nepal. Face-to-face interviews using structured questionnaires were conducted to collect the data. The collected data were entered into EpiData software v3.1, and data analysis was performed using IBM SPSS Statistics for Windows Version 21.0 (IBM Corp. Armonk, NY, USA). The statistical significance was considered at a p-value <0.05 and a 95% confidence interval (CI). Results Of 308 parents, one-third of parents were found to have correct knowledge about safe abortion, menstrual hygiene and management, modern contraceptives, prevention of sexually transmitted infections, wet dreams among male adolescents, abstaining from sexual intercourse during the fertile period, and the possibility of a male adolescent to impregnate a girl. In addition, only 40.9% of parents were found to have communicated with their adolescent children about sexual and reproductive health issues. Parents who have knowledge about puberty (aOR = 2.2, 95% CI: 1.2–3.9), belong to Bharamin/Chhetri ethnic group (aOR = 1.2, 95% CI: 1.1–2.2), self-employed (aOR: 2.4, 95% CI: 1.3–4.0), having two or more adolescent children (aOR = 2.0, 95% CI: 1.1–3.6), and whose adolescent children were staying in school hostel (aOR = 1.7, 95% CI:1.0–3.0) were more likely to have parental communication about sexual and reproductive health with their adolescent children. Conclusions Most parents do not communicate with their adolescent children on sexual health topics, although they feel sexual health education is essential to adolescents. The majority of parents were found inadequately aware of adolescent sexual health issues. It is crucial to have contextual interventions that would encourage parent-adolescent communication on sexual health matters in an integrated way to promote adolescent sexual and reproductive health.