Reducing the standardised test score gap between ethnic minority and majority students remains a global challenge in education. Research on this matter is sparse in Nepal, where ethnic minorities comprise the country's majority population but experience systemic oppression. We hypothesised that the lack of proportional teacher diversity has contributed to lower outcomes on standardised tests among ethnic minority students in Nepal. We collected data of eighth-grade students and their teachers from 10 secondary schools in two towns in Nepal through convenient and snowball samplings. Multiple linear regression was used to explore the relationship of teacher-student ethnicity matching and teachers' ethnicity on students' academic performance in science, mathematics, social studies, and the Nepali language using students' exit examinations. Our analysis showed a statistically significant positive association between teacher-student ethnicity matching and students' mathematics and social studies test scores, an ethnic advantage. In most cases, teachers from minority groups were associated with a significantly higher student-test-score than Brahmin teachers, who were in majority in teaching force. We recommend that policymakers, international education organisations, and researchers attend to teacher-student ethnicity matching and teachers' ethnicity through strategic hiring and professional developments for teachers to redress educational disparities in Nepal.