This paper details an investigation of land use/land cover changes (LULCC) for the period 1979–2016 in the Phewa Lake area watershed in Western Nepal based on an analysis of aerial photos, satellite images and ground-based observations. The main objective is to document LULCC with regards to forest, agriculture, built-up areas and roads in order to understand how sources of erosion have evolved during the investigated period. Results demonstrate that LULCC have led to a shift of active erosion areas from grazing zones around streams and forests in the northern part of the watershed to a much greater number of small failures along unplanned earthen rural roads, which have hugely increased in the watershed. The extreme rainfall event that occurred in July 2015 trigged a large number of small and large landslides, as prior to this date only 14 landslides were observed in the watershed compared with 174 after the event. More than 40% of newly triggered landslides intersect a road and 84% of them are located within a distance of 40 meter from a road. Roads are thus influencing slope stability through slope cutting, concentrating surface water, thus changing hydrological patterns, which are destabilizing upper slopes. This study quantifies observable trends of erosion in Phewa watershed, which are important for more sustainable management of rural road construction. Greater enforcement of regulations on road construction and more sustainable land management practices are required to reduce further environmental and economic impacts in Phewa Lake watershed.