Conventionally temperature lapse rate (TLR) in mountainous regions is calculated based on the in-situ air temperature data collected in sparsely located metrological stations. These in-situ temperature recordings are point data and are collected manually. Satellite remote sensing provides an alternative to above stated issues, as satellite data is continuous providing synoptic viewing and represents potentially unbiased recordings. In the present study the monthly TLR was simulated for Jhelum river basin using satellite remote sensing inputs. Inter-seasonal and inter-annual variation in the TLR was assessed using MODIS (Moderate Resolution Imaging Spectroradiometer) and ASTER (Advanced Space borne Thermal Emission and Reflection Radiometer) sensor data. Land Surface Temperature (LST) values retrieved from MODIS were correlated with the values from ASTER Digital Elevation Model (DEM) which showed a strongly correlated, inverse relationship. The results show that the TLR in Jhelum basin ranges from −4.8 to −8.0 °C/km with strong inter-seasonal variation.