Globally, urban expansion has led to habitat fragmentation and altered resource availability thus posing significant challenges for wildlife. This study analyzed spatial distribution, habitat use patterns, and anthropogenic impacts on habitat occupancy of the Critically Endangered Chinese pangolin (Manis pentadactyla) in the urban landscape of Dharan Sub-metropolitan City, Nepal. Using a single-season occupancy modelling approach, we investigated the factors influencing the detection probability and habitat occupancy of Chinese pangolins in 134 grids of each 600 m × 600 m. Our study identified the role of termite mounds in influencing detection probability, emphasizing the species’ myrmecophilous behavior. Additionally, the Human Disturbance Index (HDI) emerged as a significant factor negatively affecting habitat occupancy of Chinese pangolins. We observed a medium level of anthropogenic disturbances in the grids where pangolin presence was detected. The findings emphasize the need for targeted conservation efforts, considering the fine-scale ecological and anthropogenic factors impacting Chinese pangolins in urban and peri-urban areas. The results underscore the urgency of implementing effective conservation measures to ensure the long-term survival of Critically Endangered Chinese pangolins in urban environments, not only in Dharan but also in similar lowlands areas and the Churia range of Nepal.