The Kathmandu Valley, Nepal, is a broad bowl-shaped basin in the Himalayan foothills, with a population of more than two million people. Its growing air pollution problem is strongly affected by wind systems generated by the heating and cooling of the surrounding topography. We carried out a field measurement campaign of air pollutants and meteorology in the Kathmandu Valley during the dry season 2004-2005, followed by MM5 simulations nested down to 1 km resolution. The model results have allowed us to interpret the observed distinct diurnal cycle and determine the major processes responsible for the observations. We found that, at night, the Kathmandu Valley behaves like a large basin, with down-slope flows on surrounding mountains contributing to an accumulating cold air pool that grows to the altitude of surrounding mountain passes. The arriving cold air pushes underneath the air mass polluted in the evening, lifting up layers of polluted air, while providing relatively clean conditions to the surface during pre-dawn hours. After sunrise the elevated layers re-circulate to the surface, leading to a sharp rise in pollution. During the morning a mixed layer begins to grow over the valley, but it peaks at mid-day. Further growth is stunted by the arrival through mountain passes of cooler air that originated over lower regions outside of the Kathmandu Valley. This creates a renewed stratification as cooler air spreads across valley bottom; such behavior has been observed elsewhere on a number of elevated plateaus. During the afternoon most of the valley's ventilation takes place at low elevations, with strong winds bringing background air through the western passes, while transporting polluted air out the eastern passes. Our study sheds light onto some of the complex patterns of air pollution transport that take places in polluted mountain areas, while helping guide future research, including a proposed study of the ventilation of Ganges Valley air through the Himalaya.