Modi, the first Indian Prime Minister to pay a bilateral visit to Nepal in 17 years, was received at the Tribhuvan International Airport here by Prime Minister Sushil Koirala who deviated from protocol for the purpose.
Deputy Prime Ministers Bam Dev Gautam and Prakash Man Singh were also present at the airport.
A colorful ceremonial guard of honour was presented to Prime Minister Modi at the airport with the anthems of India and Nepal being played.
Modi was also offered a 19-gun salute by the Nepal Army.
There was tight security in and around the airport.
The route from the airport to the hotel, a drive of about 10 minutes, saw an impromptu line up of the local people who had turned out in large numbers, waving flags and clicking photographs with cameras as well as mobile phones.
"I am excited about my visit and pleased that I am able to go there within weeks of assuming office as Prime Minister," Modi had said in his pre-departure statement summing up the sentiment attached to the two-day trip.
A personal element is also attached the visit as the Prime Minister will be reuniting a 26-year-old Nepalese youth Jeet Bahadur with his family after over 16 years.
Modi has brought along with him Bahadur whom he had accidentally found in bad condition in Ahmedabad about 16 years back then looked after him.
On the official part, Modi will be holding talks with his counterpart Koirala and meet other political leaders. He will also have the rare honour of addressing Nepal's Constituent Assembly.