Tibet Buddhism, also called Lamaism, formed in the 10th century, however Buddhism was introduced into Tibet in the 7th century under the reign of King Songtsen Gampo (?- 649 or 650 AD). He married Nepalese Princess and Chinese Princess who were both Buddhists and brought with them many Buddhist scriptures and statues. Then Buddhism started to mingle with Tibet culture, however during Landama's (or Lang Darma) reign, Buddhism was banned and demolition began before it was restored in the second transmission in the 10th century. Then Tibetan Buddhism established and gradually became dominant in Tibet and spread into neighboring provinces and countries. And later Tibetan Buddhism gradually split into different sects and gained political influence.

Tibet Buddhism is based on Madhyamika and Yogacara and belongs to the Mahayana school. It also utilizes the symbolic ritual practices of Tantric Buddhism (Vajrayana) and incorporates features of the indigenous Tibetan Bon religion in competition with it. It is much more mystical than other forms of Buddhism due to Tantric and Bon influence, strong relying on mudras (ritual postures), mantras (sacred speech), yantras (sacred art) and secret initiation rites.

Tibetan Buddhism has many sects and subsects and the following five are the most influential ones.

Nyingmapa, the Ancient Ones, began around 750 with Padmambhava. Its name means "old", since it was the oldest Buddhist sect in Tibet. Because Nyingmapa lamas wear red robes and hats, it was also called Red sect. It has a loose organization and focuses on mantra practice. Its lamas can be married and usually live in small groups. The sect remains much more indigenous Bon religion features than the other sects. Nyingmapa lamas believe that one's mind is pure and through the Buddhist cultivation to prevent disturbances outside, one can be Buddha. Another feature of this sect is it has maximum deities compared with other sects. Famous Nyingmapa monasteries include Mindroling Monastery and Dorje Drak Monastery. The former is well known for its Tibetan calligraphy.

Kahdampa means that Buddha's deeds and tuitions should be doctrines of cultivation. It is Atisha's lineage. Its tradition lays stress on the scriptures and discipline and emphasizes only a few outstanding ones can be imparted with Tantra. Kahdampa believes samsara and retribution, so it developed rapidly. Comparatively, its Yoga and Tantra remain pure. Its main monastery is Nechung Monastery, hegumen of which were once the regents of the Tibetan government when Dalai Lamas were young. Later this sect converts to Gelugpa.

Kagyupa began from great teachers, Marpa and Milarepa. Kagyupa means "to teach orally" and focus on Tantric cultivation. Since Marpa and Milarepa wore white robes, this sect is also called White sect. This sect stresses combination of practise of quasi-qigong and Buddhism satori. It also advocates asceticism and obedience from which to get cultivation. Its doctrines are unique. One important contribution of Kagyupa was the establishment of tulku (incarnation lama) system, in which an existing lama can provide clues of his incarnation lama. Kagyupa's principal shrine is Tsurphu Monastery, which is the traditional seat of Karmapa lama.

Sakyapa arose in 1073 at Sakya Monastery after which it was named. The sect later governed Tibet for a period. Since the wall of the monastery was painted with red, white and black strips, it was called Colorful sect colloquially. Sakyapa's doctrines persuade people to do good deeds to gain good incarnation in next samsara, to discard all temporal desires to get relieved from pain.

Gelugpa, the order of Dalai lama and Panchen lama, also called Yellow sect since they wear yellow hats, began with Tsong Khapa, a great Buddhist reformer, in 1407. It absorbed Kahdampa and carried on Atisha's tradition. It stresses strict discipline and study of scriptures. Its successful reform made it dominant in Tibet after the 17th century, leaving other sects to play a minor role. It has 6 main monasteries, named Ganden Monastery, Ta'er Monastery, Drepung Monastery, Labrang Monastery, Sera Monastery and Tashilhunpo Monastery.