Xpert MTB/RIF assay is regarded as a great achievement of modern medicine for the rapid diagnosis of multidrug-resistant tuberculosis (MDR-TB). The main purpose of this study was to determine the performance of Xpert MTB/RIF assay compared to conventional drug susceptibility testing (DST) method for the diagnosis of MDR-TB. A comparative cross sectional study was carried out at German-Nepal Tuberculosis Project, Kathmandu, Nepal, from April 2014 to September 2014. A total of 88 culture positive clinical samples (83 pulmonary and 5 extra-pulmonary) received during the study period were analyzed for detection of multidrug-resistant tuberculosis by both GeneXpert MTB/RIF assay and conventional DST method. McNemar chi square test was used to compare the performance of Xpert with that of DST method. A p-value of less than 0.05 was considered as statistically significant. Of total 88 culture positive samples, one was reported as invalid while 2 were found to contain nontuberculous Mycobacteria (NTM). Among remaining 85 Mycobacterium tuberculosis culture positive samples, 69 were found to be MDR-TB positive by both methods. The overall sensitivity, specificity, positive predictive value (PPV) and negative predictive value (NPV) of GeneXpert MTB/RIF assay were found to be 98.6%, 100%, 100% and 93.8% respectively. Statistically, there was no significant difference between the diagnostic performance of Xpert and conventional DST method for detection of MDR-TB. GeneXpert MTB/RIF assay was found to be highly sensitive, specific and comparable to gold standard conventional DST method for the diagnosis of MDR-TB.