Background Although the debate on the safety and women's right of choice to a home delivery vs. hospital delivery continues in the developed countries, an undesirable outcome of home delivery, such as high maternal and perinatal mortality, is documented in developing countries. The objective was to study whether socio-economic factors, distance to maternity hospital, ethnicity, type and size of family, obstetric history and antenatal care received in present pregnancy affected the choice between home and hospital delivery in a developing country. Methods This cross-sectional study was done during June, 2001 to January 2002 in an administratively and geographically well-defined territory with a population of 88,547, stretching from urban to adjacent rural part of Kathmandu and Dhading Districts of Nepal with maximum of 5 hrs of distance from Maternity hospital. There were no intermediate level of private or government hospital or maternity homes in the study area. Interviews were carried out on 308 women who delivered within 45 days of the date of the interview with a pre-tested structured questionnaire. Results A distance of more than one hour to the maternity hospital (OR = 7.9), low amenity score status (OR = 4.4), low education (OR = 2.9), multi-parity (OR = 2.4), and not seeking antenatal care in the present pregnancy (OR = 4.6) were statistically significantly associated with an increased risk of home delivery. Ethnicity, obstetric history, age of mother, ritual observance of menarche, type and size of family and who is head of household were not statistically significantly associated with the place of delivery. Conclusions The socio-economic standing of the household was a stronger predictor of place of delivery compared to ethnicity, the internal family structure such as type and size of family, head of household, or observation of ritual days by the mother of an important event like menarche. The results suggested that mothers, who were in the low-socio-economic scale, delivered at home more frequently in a developing country like Nepal.