The two women were discharged last month after being detained for nearly two months, the Kathmandu Post newspaper reported. It cited one of the women as saying they were labeled as lesbians.
The army denied the report and said the two women were dismissed on disciplinary grounds.
"They were discharged for failing to maintain minimum discipline. There was no sexual discrimination or harassment involved in the decision to dismiss them," army spokesman Brig. Gen. Ramindra Chetri said.
Nepal's army began recruiting women only three years ago. The first batch of women graduated from training and joined the army in non-combat roles in 2004.
Nepal's Constitution bars discrimination on the basis of sexual orientation, but the army does not have any clear regulations on the issue.