The paper is the outcome of a systematic effort to study and analyze the experiences of the Kirtipur Housing Project (KHP), the first ever grassroots-led squatter resettlement project in Kathmandu. It is widely hailed as a success story as it has been able to provide a legal, affordable and good quality housing solution to the Sukumbasis through grassroots mobilization. The paper analyses the dynamics of this mobilization and the roles of different actors to show how community empowerment, civil actions and local government interests have converged to create a constructive partnership in line with wider enabling principles. Apart from meeting the narrowly defined objective to rehouse 44 households, the project reflects capacity of the community, quite apart from lobbying and protest, in areas of project planning and management. While no grassroots mobilisation can be expected to replicate in a dynamic environment, the paper draws some policy insights that indicate the ability of the grassroots mobilization in Kathmandu to continue and grow. Conversely, the lessons learned from the project also point to limitations in terms lack of prerequisite critical mass or economic benefits to influence the government to prepare a policy framework under which it can foster in a more structured way.