Hydro Lab initially started its activities as River Research Laboratory in the premises of the Institute of Engineering, Tribhuvan University (TU), Kathmandu, back in 1988. Hydro Lab cooperated with the Norwegian University of Technology (NTH by then) and the Institute of Engineering (IoE), Tribhuvan University, to carry out a physical hydraulic model study of the headworks of the 12 MW Jhimruk Hydropower Project in Nepal. Professor Dagfinn K. Lysne and Dr. Haakon Stole from the Norwegian University of Science and Technology (NTNU) were instrumental in materializing the concept of establishing such a hydraulic laboratory in Nepal. Following this, the model study of the headworks of the 60 MW Khimti 1 Hydropower Project was carried out from 1995 to 1997 with technical support from NTNU. Hydro Lab Pvt. Ltd., an independent laboratory with permanent facilities, was established in 1998 by replacing the existing River Research Laboratory.

The objective of Hydro Lab is to assist in the achievement of national development goals by providing an effective base for research and development, training and consulting services in the field of water resources development in Nepal and in the region. This is the only organization of its kind in Nepal that is capable of performing physical hydraulic model studies for water resources development projects as well as sediment studies and associated research. Since its establishment in 1998, Hydro Lab has gradually expanded its activities to include sediment sampling and laboratory analyses, flow measurement, prototype turbine efficiency testing, settling basin performance tests, reservoir sedimentation study, hydraulic design and design review of the headworks. Apart from conducting physical hydraulic model studies, the service of numerical modelling has also been made available.

As part of the expansion process, Hydro Lab has established a geotechnical laboratory and started to provide geotechnical and geological testing and investigation services. After further expansion, an eco-hydraulics component was added to fulfil the national gap of research in the composite field of hydraulics and riverine ecology. Knowledge sharing through training/workshops and providing research opportunits to MSc and PhD students, together with project works and internships to engineering students from different universities across Nepal and abroad, are also important activities, among others. The Establishment of cooperation and the creation of a global network with national and international professionals, as well as academic institutions with similar research interests, is an ongoing priority for Hydro Lab. Hydro Lab has internationally qualified and experienced professionals.