Villagers from Leurani crowned Harry with a pheta - a white turban-like head-dress.
The prince went to the village to experience life with people in the foothills of the Himalayas.
Earlier he imitated the movements of a tiger when he visited a national park, setting off an automatic camera.
BBC royal correspondent Nicholas Witchell said Bardia National Park is home to between 50 and 100 tigers, together with elephants and rhino.
"Sadly that's a combination of wildlife which is a magnet to the unscrupulous greed of the poachers," he said.
"Harry and his brother William are keenly interested in the efforts to curb the trade in illegal animal parts - tiger skins, elephant tusks and rhino horns fetch big prices from dealers and customers in South East Asia.
"Harry was briefed on the efforts the park is making to combat the poachers and he met some of the Nepalese army units who patrol the park."
The prince had hoped to see big cats during his visit, on day three of a five-day trip to Nepal, but camera traps designed to capture the animals' nocturnal movements remained blank.
Instead, he was asked to walk like a tiger to see how the camera traps work.
Harry hunched over and shuffled past the cameras, which are placed next to tiger droppings, causing a flash to go off.
He was then shown by his guide from Nepal's National Trust for Nature Conservation the laptop to which footage from the cameras is sent.
The prince reacted to a picture of a tiger walking past the spot where he was standing, saying: "That was here? Amazing."
Harry, who is on his first official visit to Nepal, has already met survivors of the earthquakes in April and May last year, which killed nearly 9,000 people.
He has also discussed climate change with Nepal's president and visited sites hit by the quakes.
Prince Harry was made honorary head of a Nepalese village when he joined a remote community to spend the night with a Gurkha family.