Shrestha, 45, was brought to B.P. Koirala Medical Institute, and was later transferred to a hospital in the Indian town of Siliguri, where he died while undergoing treatment.
The Committee to Protect Journalists is investigating whether or not Shrestha was attacked in connection with his journalistic work. Security agencies have accused Maoist rebels of conducting the attack, but these allegations remain unconfirmed.
In the past, rural journalists have been targeted by both sides of the ongoing conflict between the Nepali government and Maoist rebels. Following the royal coup of Nepal's King Gyanendra and the curtailment of press freedoms on February 1, it has been difficult to obtain independent information from rural areas like Dharan.
The Federation of Nepalese Journalists had previously condemned the attack and collected funds for the editor's medical treatment.
Local news reports said that Shrestha's body would be returned to Dharan today.