This paper examines the nexus between the work environment and the retention of employees in the banking sector of Nepal. The study is based on a primary survey of private commercial and development banks of Pokhara Valley. The impact of the work environment on the retention of employees in the banking sector was examined using a descriptive and explanatory research approach. The researcher selected 211 employees randomly who were involved for the last three years in the banking sector. The structured questionnaires were administered to collect data related to the work environment and retention of employees. The study has identified several factors, including teamwork, flexibility, pressure, supportive executives, and a friendly environment, significantly correlated with employee retention in the banking sector. The linear regression analysis found a significant impact of teamwork, flexibility, pressure, supportive executives, and a friendly environment on employee retention. Financial and non-financial incentives such as competitive pay and benefits, a friendly and inclusive workplace culture, learning and development opportunities, promotion opportunities, and work-life balance can create a healthy workplace environment and aid in employee retention. The management executives should pay adequate attention to retaining and building a committed workforce through a good working environment in Nepalese private commercial and development banks.