Archaeological evidence suggests Bhutan was possibly inhabited as early as 2000 BC. Buddhism was probably introduced in the 2nd century although traditionally its introduction is credited to the first visit of Guru Rinpoche in the 8th century.
Guru Rinpoche is the most important figure in Bhutan's history, regarded as the second Buddha. His miraculous powers included the ability to subdue demons and evil spirits, and he preserved his teachings and wisdom by concealing them in the form of terma (hidden treasures) to be found later by enlightened treasure discoverers known as tertons. One of the best known of these tertons was Pema Lingpa; the texts and artefacts he found, the religious dances he composed, and the art he produced, are vital parts of Bhutan's living heritage.
Before the 16th century, numerous clans and noble families ruled in different valleys throughout Bhutan, quarelling among themselves and with Tibet. This changed in 1616 with the arrival of Ngawang Namgyal, a monk of the Drukpa Kagyu school of Buddhism from Tibet. He taught throughout the region and soon established himself as the religious ruler of Bhutan with the title Shabdrung Rinpoche. He repelled attacks from rival lamas and Tibetan forces and transformed the southern valleys into a unified country called Druk Yul (Land of the Dragon). While the political system he established lasted until the beginning of the 20th century, the announcement of the Shabdrung's death in 1705 was followed by 200 years of internal conflict and political infighting.
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