“The PM has quit,” his aide Prakash Silwal told Reuters news agency on Tuesday.
Mr Oli’s exit comes as demonstrators defied an indefinite curfew and clashed with police, a day after 19 people died in violent protests triggered by a social media ban.
His government lifted the ban after protests turned violent when police fired tear gas and rubber bullets at protesters trying to storm parliament on Monday.
The unrest is the worst Nepal has seen in decades. The Himalayan country has struggled with economic uncertainty and political instability since protests led to its monarchy being abolished in 2008.
Prior to resigning, Mr Oli had on Tuesday called a cross-party meeting where he said violence was not in Nepal’s interests and added: “We have to resort to peaceful dialogue to find solutions to any problem.”
But anger against the government continued with protesters gathering outside parliament and other significant locations in the Nepali capital of Kathmandu.
Some demonstrators set fire to tires, threw stones at riot police and chased them through the streets.
Witnesses also told Reuters that the Kathmandu homes of some politicians had been set on fire, while local media reported that some ministers were taken to safety by military helicopters.
Some arrivals at Kathmandu airport, Nepal’s main international gateway, were cancelled due to poor visibility amid smoke from the protests.
The demonstrations have been driven by young people’s frustration with the Nepali government’s perceived lack of action to tackle corruption and boost economic opportunities.
