Human wildlife conflict (HWC) has emerged as a serious challenge, particularly in low-income countries where protected areas and human settlements overlap, affecting both biodiversity and human well-being. Although HWC generally cause economic losses, disrupt food security and exert socio-psychological pressures on local people, it also negatively affects wildlife populations by increasing retaliatory killings and threatening the survival of endangered species. Nevertheless, the ways in which HWC shapes the local livelihoods of already vulnerable communities remain underexplored. To address this gap, we analysed HWC incident data and vulnerability indicators from 92 municipalities surrounding protected areas (PAs) in Nepal’s lowland Tarai region. Using both the Livelihood Vulnerability Index (LVI) and an IPCC-based vulnerability framework, we assessed the extent to which HWC contributes to overall livelihood vulnerability. We found that while municipalities adjacent to PAs indeed experience higher livelihood vulnerability, the direct contribution of HWC—though significant at the local level—is relatively modest compared to socio-economic and environmental drivers. These findings highlight HWC as an integral part of broader socio-ecological processes, closely linked with livelihood insecurity, poverty, limited access to services and climate stresses. Addressing HWC, therefore, requires a holistic, multi-sectoral approach that goes beyond reactive, species-specific mitigation to incorporate livelihood diversification, strengthen social safety nets, improved access to basic services, and climate-resilient development pathways. We recommend that future conservation and adaptation programs should adopt integrated socio-ecological frameworks that prioritize community-based conflict mitigation, improve compensation mechanisms, and align wildlife management with national livelihood resilience goals such as Sustainable Development Goals (SDGs) and global biodiversity conservation targets under the Kunming–Montreal Global Biodiversity Framework (GBF).