We present an analysis of the optical night sky brightness and extinction coefficient measurements in UBVRI at the Indian Astronomical Observatory (IAO), Hanle, during the period 2003-2008. They are obtained from an analysis of CCD images acquired at the 2 m Himalayan Chandra Telescope at IAO. Night sky brightness was estimated using 210 HFOSC images obtained on 47 nights and covering the declining phase of solar activity cycle-23. The zenith corrected values of the moonless night sky brightness in mag/square arcsecs are 22.14(U), 22.42(B), 21.28(V), 20.54(R) and 18.86(I) band. This shows that IAO is a dark site for optical observations. No clear dependency of sky brightness with solar activity is found. Extinction values at IAO are derived from an analysis of 1325 images over 58 nights. They are found to be 0.36 in U-band, 0.21 in B-band, 0.12 in V-band, 0.09 in R-band and 0.05 in I-band. On average, extinction during the summer months is slightly larger than that during the winter months. No clear evidence for a correlation between extinction in all bands and the average night time wind speed is found. Also presented here is the low resolution moonless optical night sky spectrum for IAO covering the wavelength range 3000-9300 \AA. Hanle region thus has the required characteristics of a good astronomical site in terms of night sky brightness and extinction, and could be a natural candidate site for any future large aperture Indian optical-infrared telescope(s).