BACKGROUND: The COVID-19 pandemic response is affecting maternal and neonatal health services all over the world. We aimed to assess the number of institutional births, their outcomes (institutional stillbirth and neonatal mortality rate), and quality of intrapartum care before and during the national COVID-19 lockdown in Nepal. METHODS: In this prospective observational study, we collected participant-level data for pregnant women enrolled in the SUSTAIN and REFINE studies between Jan 1 and May 30, 2020, from nine hospitals in Nepal. This period included 12.5 weeks before the national lockdown and 9.5 weeks during the lockdown. Women were eligible for inclusion if they had a gestational age of 22 weeks or more, a fetal heart sound at time of admission, and consented to inclusion. Women who had multiple births and their babies were excluded. We collected information on demographic and obstetric characteristics via extraction from case notes and health worker performance via direct observation by independent clinical researchers. We used regression analyses to assess changes in the number of institutional births, quality of care, and mortality before lockdown versus during lockdown. FINDINGS: Of 22 907 eligible women, 21 763 women were enrolled and 20 354 gave birth, and health worker performance was recorded for 10 543 births. From the beginning to the end of the study period, the mean weekly number of births decreased from 1261.1 births (SE 66.1) before lockdown to 651.4 births (49.9) during lockdown-a reduction of 52.4%. The institutional stillbirth rate increased from 14 per 1000 total births before lockdown to 21 per 1000 total births during lockdown (p=0.0002), and institutional neonatal mortality increased from 13 per 1000 livebirths to 40 per 1000 livebirths (p=0.0022). In terms of quality of care, intrapartum fetal heart rate monitoring decreased by 13.4% (-15.4 to -11.3; p<0.0001), and breastfeeding within 1 h of birth decreased by 3.5% (-4.6 to -2.6; p=0.0032). The immediate newborn care practice of placing the baby skin-to-skin with their mother increased by 13.2% (12.1 to 14.5; p<0.0001), and health workers' hand hygiene practices during childbirth increased by 12.9% (11.8 to 13.9) during lockdown (p<0.0001). INTERPRETATION: Institutional childbirth reduced by more than half during lockdown, with increases in institutional stillbirth rate and neonatal mortality, and decreases in quality of care. Some behaviours improved, notably hand hygiene and keeping the baby skin-to-skin with their mother. An urgent need exists to protect access to high quality intrapartum care and prevent excess deaths for the most vulnerable health system users during this pandemic period. FUNDING: Grand Challenges Canada.