It is a branch of Chinese Buddhism. In the 7th century A.D., Buddhism was introduced into Tibet from China and Nepal. It first gained acceptance among the nobility, later being gradually embraced by all of society. The conversion of Tibet is usually considered as proceeding in two stages, the first propagation from the 7th to the 9th centuries, followed after a break by the second propagation lasting from the tenth century until the middle of the present century. During this long latter period, a constant stream of eminent Buddhist monks and scholars came from India and Kashmir bringing the dharma. An indigenous religion, Bon, influenced the development of the particular form of Mahayana Buddhism known as Tibetan Buddhism.

Tibetan Buddhism has its own distinctive qualities and practices. A well-known example is the recognition of reincarnating Living Buddhas, a belief alien to Chinese Buddhism. Many different sects were formed over the centuries, all with the same goal. These include the Nyingma, Sagya, Gagyu and Gelug sects. The Gelug, sometimes referred to as the "Yellow Hats" in reference to the colour of their headgear, was founded by Zongkapa and has been the most influential sect since its beginnings in the early 15th century. Later the order developed its recognition of the Dalai Lama and the Panchen Erdeni as reincarnating Living Buddhas.