Introduction. The use of e-cigarettes has been increasing globally especially among the youth population due to rigorous advertisement, marketing, and promotion which has become a significant public health concern. Hence, this study is aimed at identifying the prevalence, correlates, and perception of e-cigarettes among undergraduate students of Kathmandu city. Methods. A cross-sectional study was conducted among 405 undergraduates of capital city of Nepal from April 2022 to December 2022. A two-stage systematic random sampling was used to select the respondents. An anonymous, semistructured, self-administered questionnaire was used for data collection. A descriptive, bivariable, and multivariable analysis was done using SPSS version 20. Results. The prevalence of ever use and current use of e-cigarettes was 21.2% and 5.9%, respectively. Number of close friends (AOR = 5.23, CI: 1.26, 16.39), number of friends using e-cigarettes (AOR = 7.23, CI: 0.93, 22.82), male sex (AOR = 2.88, CI: 2.15, 10.35), and age (COR = 5.07, CI: 0.93, 8.19) were the major predictors of current e-cigarette usage. Similarly, number of friends using e-cigarettes (AOR = 5.90, CI: 2.15, 10.35), male sex (AOR = 3.53, CI: 2.15, 10.35), age (COR = 4.56, CI: 0.98, 6.24), and place of residence (COR: 5.19, CI: 0.83, 8.02) were the major predictors of ever e-cigarette usage. The prevalence of e-cigarette consumption was higher in males than females (5.4% vs. 0.5%). Approximately, 34.8% respondents had perceived e-cigarettes as a means to help in smoking cessation. 56.5% adults knew that e-cigarettes promoted conventional smoking. Majority (64.7%) of the undergraduate students had presumed e-cigarettes as less harmful to conventional smoking. Conclusion. Ever use, current use, and misconception on e-cigarettes were widespread among the undergraduate students. Age, male sex, number of close friends, number of peers using e-cigarette, and place of residence were the major predictors for e-cigarette usage. To deal with the increased e-cigarette consumption state, awareness on the harmful addictive properties of e-cigarettes along with its adverse health consequences must be propagated and an appropriate intervention must be implemented.