Despite the widespread use and trade of the highly valued Himalayan medicinal plant, Neopicrorhiza scrophulariiflora, there is still inadequate information on its distribution and on the environmental factors that define suitable habitats. Such information is needed to identify suitable areas for sustainable resource extraction. We hypothesize that there is a discrepancy between the geographical distribution of trade and climatically suitable areas and suggest that this could lead to a risk of local depletion of the species, which could seriously affect rural livelihoods. To address this hypothesis, we conducted species distribution modeling of N. scrophulariiflora using Maximum Entropy with ten environmental variables and 63 species occurrence records (after rarefaction) from Nepal and related the resulting distribution model to trade assessment statistics from 12 fiscal years (2004–2016). The predicted area of suitable habitat in Nepal was estimated at 11,617 km2, and highly suitable areas were located in a narrow elevational range (4000–4400 m), with a predicted area of 386 km2 (0.3 %). Suitable and highly suitable areas were mostly located in the eastern mountains, probably due to mild temperatures and adequate precipitation around the peak of the plants’ growing season. Available official trade records indicated that Nepal exported only 372 tons of N. scrophulariiflora rhizomes in 2004–2016 (average: 31 tons/annum), mostly from the western mountains where predicted habitats were classified as less suitable. Discordant geographical patterns of habitat suitability, extraction from habitats of low suitability, and increasing trade indicate that the current resource exploitation is likely to be unsustainable. We suggest formulating management strategies for locations with heavy collection and trade, conducting cultivation trials in suitable patches, and identifying sustainable annual harvest limits.