AbstractBackground and AimsThe COVID‐19 pandemic has exerted a substantial influence on every sector of people's lives worldwide, including Nepal. The tourism industry is not exceptional. Lakeside Pokhara is one of the country's major tourist hubs and relies both on national and international visitors. The people residing in this area who depend on tourism‐related businesses to regulate their daily living faced numerous stressors and psychological impacts due to the pandemic. This study aimed to explore the COVID‐19 pandemic‐related stressors and their psychological impact among people dependent on the tourism business in the Lakeside of Pokhara, located in the Gandaki Province of Nepal.MethodVia the qualitative approach, semi‐structured in‐depth interviews were conducted to collect the data from 20 individuals related to tourism business stakeholders in Lakeside of Pokhara. Thematic analysis was performed to analyze the data.ResultsThe study found business‐related stressors among the people dependent on the tourism businesses, and these stressors were found to increase the experiences of psychological issues, including suicidal ideation. The pandemic has not only affected their economy but has also had an impact on their personal, familial, and social life. However, to combat the problems most of the study participants were found to be utilizing positive coping mechanisms, whereas some respondents were observed to consume more alcohol as a negative coping strategy.ConclusionsPeople indulging in the tourism sectors were at greater risk of vulnerability in the future pandemic. Tourism business stakeholders struggled to combat the numerous stressors and psychological impacts carried out by the COVID‐19 pandemic and lockdown. Therefore, there is a growing need for government bodies to implement favorable business‐related policies, and Mental Health and Psychosocial Support (MHPSS) related programs to these stakeholders.