Khata Corridor forest, which serves as a border crossing for wildlife between Nepal and India, is one of the areas in Nepal with the highest incidence of human–wildlife conflict. In recent years both the tiger Panthera tigris tigris and human populations in this region have increased, leading to more frequent conflict. We aimed to determine whether increased conflict risk was primarily from tigers entering human settlements or whether there are additional drivers associated with human use of forested areas. We conducted the study in four settlements that varied in socio-economic status and distance from Bardiya National Park, through field visits and household surveys. Tiger records (sightings, pug marks and attacks) were most frequent far from Bardiya National Park, in settlements without benefits from tiger-based tourism and nearer the periphery of forest, and were rarely associated with the interior of settlements. Human visitation into forests was also highest in the most remote settlement. Our findings suggest that conflict risk is driven by the extent of human activity in forested areas, reflecting an unequal distribution of the conservation benefits of tourism amongst settlements. In the long-term, continued coexistence between people and tigers will depend on minimizing conflict risk across settlements through establishing an equitable distribution of conservation benefits. In the short term, we recommend raising public awareness of tiger behaviour to emphasize that tigers are highly unlikely to enter and occupy the interior of human settlements, mitigating negative perceptions of conflict risk.