This article analyses the practices, beliefs, and challenges of in-service Nepali EFL teachers who are required to carry out action research and submit a written report for their performance appraisal. We have analysed action research reports (n = 88) and interviews (n = 6) with public-school EFL teachers. The findings show that speaking, classroom participation, and writing are the three major problem areas teachers have pointed out in their action research reports. In theory, teachers have positive beliefs about the importance of action research for better teaching and professional development. They have claimed that action research has helped them address classroom problems. However, the analysis of the reports indicates that teachers lack data/evidence to support their claims about research problems and the effectiveness of the actions they have introduced in the classroom. The findings of the study show that teachers need mentoring support to carry out and write up action research reports.