Severely degraded hillslopes in the Lesser Himalaya challenge local communities as a result of the frequent occurrence of overland flow and erosion during the rainy season and water shortages during the dry season. Reforestation is often perceived as an effective way of restoring predisturbance hydrological conditions but heavy usage of reforested land in the region has been shown to hamper full recovery of soil hydraulic properties. This paper investigates the effect of reforestation and forest usage on field-saturated soil hydraulic conductivities (Kfs) near Dhulikhel, Central Nepal, by comparing degraded pasture, a footpath within the pasture, a 25 year old pine reforestation, and little disturbed natural forest. The hillslope hydrological implications of changes in Kfs with land-cover change were assessed via comparisons with measured rainfall intensities over different durations. High surface and near-surface Kfs in natural forest (82–232 mm h−1) rule out overland flow occurrence and favor vertical percolation. Conversely, corresponding Kfs for degraded pasture (18–39 mm h−1) and footpath (12–26 mm h−1) were conducive to overland flow generation during medium- to high-intensity storms and thus to local flash flooding. Pertinently, surface and near-surface Kfs in the heavily used pine forest remained similar to those for degraded pasture. Estimated monsoonal overland flow totals for degraded pasture, pine forest, and natural forest were 21.3%, 15.5%, and 2.5% of incident rainfall, respectively, reflecting the relative ranking of surface Kfs. Along with high water use by the pines, this lack of recovery of soil hydraulic properties under pine reforestation is shown to be a critical factor in the regionally observed decline in base flows following large-scale planting of pines and has important implications for regional forest management.