The educational environment of an institution affects learning and has a significant role in determining students' academic achievement. The objective of the study was to determine the undergraduate medical students' perception about educational environment in clinical years of study utilizing Dundee Ready Education Environment Measure (DREEM) questionnaire.A descriptive cross-sectional questionnaire-based study was conducted among fourth and fifth-year medical students toward the end of their 2016 academic year in Chitwan Medical College, Bharatpur, Nepal. The 50-item DREEM questionnaire was used to collect the data. The items were scored based on a 5-point Likert scale. The data were analyzed using SPSS version 20. Scores obtained were expressed as mean±SD.The mean total DREEM score was 122/200. The mean score for Students' Perceptions of Learning, Students' Perceptions of Teachers, Students' Academic Self-Perceptions, Students' Perceptions of Atmosphere, and Students' Social Self-Perceptions were 29.8/48, 25.9/44, 20.3/32, 28.6/48, and 17.27/28, respectively. This shows the environment for learning was satisfactory. There were nine problem areas with a mean score of ≤2. There was no significant difference observed in educational environment subscales scores according to enrollment year, gender, or funding source for education.The overall student's perception of the educational environment was satisfactory. Nevertheless, the study revealed some problematic areas in the learning environment which require remedial measures to make the environment more conducive for learning to satisfy the students and achieve a far better outcome.