"The king has taken steps that do not give any room for compromise," the leader of the Maoist rebels, Prachanda, told the BBC in a rare interview.
"The king, I think, will either be executed by the people's court or he might be exiled," he said. "We don't see a future for him and the Nepali people don't either. The king might be finished or he might leave."
Prachanda predicted Nepal would be "a republic state in less than five years", saying the king's seizure of absolute power had put him on "the road to hell."
King Gyanendra seized power just over a year ago, saying he needed to oust an interim government to bring order to a chaotic and corrupt political scene and quell the rebellion, which has claimed nearly 13,000 lives in the past decade.
A year on, the economy has fallen apart and the emboldened rebels - who control a third of the country - have stepped up their attacks, striking deep into Nepal's urban centres.
Prachanda said his rebels, who are fighting to set up a communist state, want an ideological victory as well as a military one.
"I believe we can, and we have to, conquer Katmandu both militarily and politically," he added.