Even though several studies have examined various risk factors for hypertension, residential influence is poorly explored especially in the low-income countries. We aim to investigate the association between residential characteristics and hypertension in resource limited and transitional settings like Nepal. A total of 14,652 individuals aged 15 and above were selected from 2016-Nepal Demographic and Health Survey. Individuals with blood pressure ≥140/90 mmHg or a history of hypertension (as identified by physicians/health professionals) or under antihypertensive medication were defined as hypertensive. Residential characteristics were represented by area level deprivation index, with a higher score representing higher level of deprivation. Association was explored using a two-level logistic regression. We also assessed if residential area modifies the association between individual socio-economic status and hypertension. Area deprivation had a significant inverse association with the risk of hypertension. Individuals from the least deprived areas had higher odds of hypertension compared to highly deprived areas 1.59 (95% CI 1.30, 1.89). Additionally, the association between literacy a proxy of socio-economic status and hypertension varied with a place of residence. Literate individuals from highly deprived areas were likely to have a higher odds of hypertension compared to those with no formal education. In contrast, literate from the least deprived areas had lower odds of hypertension. These results identify counterintuitive patterns of associations between residential characteristics and hypertension in Nepal, as compared with most of the epidemiological data from high-income countries. Differential stages of demographic and nutritional transitions between and within the countries might explain these associations.