Globalization and urbanization in Nepal have driven a nutritional transition from an agricultural-based diet to an ultra-processed, sugary diet. This study assessed the nutrition and oral health of 836 children age 6 months to 6 years and their families in rural and urban Nepal. Mothers were interviewed about maternal–child oral health and nutrition, and children received dental exams and height and weight measurements. Analyses utilized SPSS statistical software. Most families lived within a 5-minute walk to a store selling ultra-processed snacks and sugary drinks. While most mothers knew sweets caused tooth decay, half of the children were given sweets daily, and 58.2% of children had dental caries. Caries began in the first 2 years and increased in prevalence and severity to age 6, when 74.3% had caries and 20% experienced mouth pain. Despite greater health knowledge and resources among urban mothers, urban children’s increased access to junk food and frequency of consumption was associated with higher prevalence and severity of caries compared to rural children. Severe caries was associated with malnutrition, especially in rural children. Preventive strategies are needed in early childhood to incorporate nutrition and oral health education and dental care into maternal–child health services, and develop policies to prohibit the sale of junk food around schools.