Psychiatric disorders are one of the leading causes of disease-related disability in the world today. However, little is known about the ethnic variation of these disorders within populations. This is especially true in contexts outside of the United States and the European Diaspora. This study provides new evidence from South Asia on ethnic differences in Major Depressive Episode, Major Depressive Disorder, Panic Attack, Panic Disorder, Post-Traumatic Stress Disorder, and Intermittent Explosive Disorder. We use data from 400 adult interviews conducted in Nepal in a controlled comparison design as a case study. We use a series of multilevel logistic regression models to predict ethnic group differences in psychiatric disorders and episodes with measures from clinically validated World Mental Health survey instruments. Compared to the Brahmin/Chhetri group, we found historically excluded Dalits had statistically significantly higher odds of almost all psychiatric disorders and episodes. We also found that historically resilient Janajatis had statistically significantly lower odds of being diagnosed with PTSD than the majority Brahmin/Chhetri group. We also found no significant gender difference in MDD or MDE. Psychiatric disorders and episodes vary significantly by ethnicity within a rural Asian population, but gender differences are small.