Human-wildlife conflict is one of the biggest conservation challenges throughout the world. Various conservation strategies have been employed to limit these impacts, but often they are not adequately monitored and their effectiveness assessed. Recently, electric fencing has been constructed as a means to mitigate human-wildlife conflict surrounding many Nepalese protected areas. To date, there are no other studies analyzing the cost effectiveness and efficacy of fencing for conservation. This study aims to examine the cost effectiveness of electric fencing in the eastern sector of Chitwan National Park, Nepal, where the fencing has recently been constructed. Great Indian one-horned rhinoceros (Rhinoceros unicornis), wild boar (Sus scrofa), Asian elephant (Elephas maximus), and tiger (Panthera tigris) were the main wildlife species involved in human-wildlife conflict in the buffer zone area surrounding the park, where the fencing was deployed. Electric fencing was significantly effective in reducing crop damage by 78% and livestock depredation by 30%–60%. Human mortality was not reduced significantly in the study areas and continued at low levels. Our analysis suggested that total net present value of the cost of electric fence in Kagendramalli User Committee (KMUC) and Mrigakunja User Committee (MKUC) was 1 517 959 NPR (Nepalese Rupees, 21 685 USD) and 3 530 075 NPR (50 429 USD) respectively up to the fiscal year 2009/10. Net present benefit in KMUC and MKUC was 16 301 105 NPR (232 872 USD) and 38 304 602 NPR (547 208 USD) respectively up to 2009/10. The cost-benefit ratio of electric fence up to base fiscal year 2009/10 in KMUC is 10.73, whereas MKUC is 10.85. These results illustrate that the electric fencing program is economically and socially beneficial in reducing human-wildlife conflict (crop damage and livestock depredation) around the protected areas where large mammals occur.