Rice and wheat are major cereal crops in Nepal. Climate change impacts are widespread and farmers in developing countries like Nepal are among the most vulnerable. A study was carried out to assess the impact of climate change on yield and irrigation water requirement of these cereal crops in Bhaktapur, Nepal. Laboratory and soil-plant-air-water analysis showed silt-loam being the most dominant soil type in the study area. A yield simulation model, AquaCrop, was able to simulate the crop yield with reasonable accuracy. Future (2030–2060) crop yield simulations, on forcing the Providing Regional Climates for Impacts Studies (PRECIS) based on regional circulation model simulation indicated decreased (based on HadCM3Q0 projection) and increased (based on ECHAM5 projection) yield of monsoon rice for A1B scenario, and rather stable yield (for both projection) of winter wheat. Simulation results for management strategies indicated that the crop yield was mainly constrained by water scarcity and fertility stress emphasizing the need for proper water management and fertilizer application. Similarly, a proper deficit irrigation strategy was found to be suitable to stabilize the wheat yield in the dry season. Furthermore, an increase in fertilizer application dose was more effective in fully irrigated conditions than in rainfed conditions.