The main religion of Tibet is Mahayana Buddhism and, by tradition, it has enjoyed special patronage of the state. Besides Buddhists there have been a handful of Hindus and Muslims in free Tibet. While most of the Hindus were Nepalese traders and lived only temporarily in Tibet, nearly a thousand Muslims had migrated from Kashmir to live there permanently ages ago. Some of them were businessmen while many among them worked as butchers on whom the Tibetan population depended for their daily supply of meat . One of the most interesting contradictions of the Tibetan community is that even as most of them are perpetually non-vegetarian, their deep faith in Buddhism does not permit them to kill an animal for food. This explains how their faith in Buddha's nonviolence and their love for meat in daily food made the Muslim butchers a welcome permanent guest in Tibet.

In Tibetan Mahayana Buddhism there are four traditions of Dharma practice. These are Nyingma, Sakya, Kagyu and Gelug. In addition a small section of society subscribes to Bon religion which was prevalent in Tibet before the advent of Buddhism. Bon, though not very popular these days, enjoys equal protection from the state and exists as the fifth sect of Tibetan religious system.

In the Tibetan system the Dalai Lama belongs to the GELUG sect and functions as the supreme religious and political authority of Tibet. Gelug is also know as the 'Yellow Hat Sect' because of the yellow colour of the hat of monks. This sect was established by the great scholar guru Tsongkha Pa in 14th century AD. Panchen Lama, the second most senior spiritual authority also belongs to the Gelug sect. But his office does not hold any political powers in the country's system. By tradition the relationship between the Dalai Lama and the Panchen Lama has been of teacher and student. The mantle of Guru kept on shifting between the two as the surviving one would work as the teacher of the child incarnate of the other. Interestingly, the head of Gelug sect is Ganden Tripa who had his headquarters in the famous Ganden monastery of Tibet. By tradition the successor of Ganden Tripa is appointed on the basis of scholarly merits of the person.

NYINGMA school of Tibetan Mahayana is believed to be the oldest among all. It is headed by Tenor Rimpoche who has established his headquarters in Southern India after he came to exile. It is also known as Red Hat sect and is based on teachings given by Indian Gurus Padmasambhav & Shantrakshita.

Another major sect is SAKYA which is based on the teachings of Indian Siddha Guru Birva Pa also know as Sakya Pandita who was a well known scholar of Sanskrit, Tibetan literature and Buddhist philosophy. This sect has been most influential among all sects in matters concerning Tibetan government and its administrative functioning. Currently this sect is headed by Sakya Trizen Rimpoche who has his exile headquarters in Rajpur near Dehradoon in Northern India. In this tradition the lineage passes from one Sakya Trizen to his brother's son.

KAGYU is also know as the 'Black Hat' sect because of the colour of its ceremonial cap. The personal ceremonial cap of the Karma Pa is considered to be very special and precious as it is said to be made up of the hair of one thousand Dakinis, the protectors of faith. Karma Pa heads one of the prominent sub-sects of Kagyu tradition which is known as Karma Kagyu. Two other main sub-sects of this tradition are Drukpa Kagyu and Drigung Kagyu. By tradition Karma Kagyu has been very popular in Sikkim where Karma Pa enjoyed royal patronage of the Chogyal rulers. Drukpa Kagyu enjoys the royal patronage of Bhutan's king. Besides being popular among Bhutanese masses this sect has mass following among Buddhists in Darjeeling and surrounding areas of India. However, since Bhutan is a Kagyu kingdom the Karma Pa commands big respect and influence in Bhutan also.

It was following the escape of the 16th Karma Pa in 1959 that the Chogyal of independent Sikkim invited him to live in Sikkim and helped him develop Rumtek as his new spiritual headquarters near Gangtok. Following the death of the 16th Karma Pa his traditional black hat and other personal belongings remain stored in Rumtek.

Of late some newspaper reports have been mentioning Karma Pa as the 'third ranking' monk leader in the Tibetan hierarchy which is quite misguiding. In Tibetan system all the four sects and their heads are considered to be equals. But there is no doubt that some individual Rimpoches enjoy higher levels of popularity and social respect because of their outstanding personality, education and leadership skills. Thanks to good communication skills and attractive teaching techniques of the late 16th Karma Pa, he became popular in the west where he and his students established more than a hundred religious centres between 1959 and 1981.