Bhutan's early history is steeped in Buddhist tradition and mythology. Bhutan's medieval and modern history was a time of warlords, feuds, giant fortresses and castles. The visit of Padama Sambhava in 747 AD is the important landmark in the history of the country. The kingdom's recent history begins with a hereditary monarchy that was founded in the 20th century and continued the country's policy of isolationism. It was under the leadership of the third king that Bhutan emerged from its medieval past of serfdom and reclusion. Despite the speed of modernization, Bhutan has maintained a policy of careful, controlled policy of development in order to preserve its national identity. Though known as Bhutan to the outside world, to the Bhutanese, the country is known as Druk Yul, 'land of the thunder dragon'. The people are known as the Drukpas.

Tibetan Buddhism was introduced in the 9th century when conflict in Tibet forced many monks to Bhutan bringing with them their religion. In the 12th century, the Drukpa school of Buddhism was formed and is still dominate in Bhutan today. The political and religious history of the country go hand in hand.

The early year of Bhutan the country was split with different groups and regions. In 1616 a Tibetan lama, Ngawana Namgyal, consolidated the country. in his time he repelled three invasion form Tibet and subjugated rival religions. He installed a law system and made himself ruler of Bhutan. This was the foundation of Bhutan’s systems today.

After Ngawana’s death, followed two hundreds years of war and infighting thus eroding Bhutan’s power. In 1885,  Ugyen Wangchuck was again able to consolidate the country and take leadership. He formed close ties with India and Britain. Once officially elected as king and ruler in 1907, king Ugyen signed a treaty with Britain stating that British India would not interfere in the affairs of Bhutan, thus isolating the country form out side influences.

When Ugyen Wangchuck died in 1926, his son Jigme Wangchuck became the next ruler, and when India gained independence in 1947, the new Indian Government recognized Bhutan as an independent country. In 1949, India and Bhutan signed the Treaty of Peace and Friendship, which provided that India would not interfere in Bhutan's internal affairs but would be guided by India in its foreign policy.

In 1952 Bhutan slowly began to emerge from isolation and became a member of the United nations in 1971. During this time, a new code of laws were established and so was the Royal Bhutanese army and a law court system. This was a huge step in the modern progression of Bhutan.

This paved the way for tourism to be developed in Bhutan.  Along with this the education system and social systems was modernized.

Currently Bhutan is taken in refugees from India, but does not welcome them into the society, and are threatening military action to get them to leave. Also Bhutan is negotiating with Nepal to resolve a 13 year problem of Bhutanese refugees residing in Nepal. Bhutan does not want these people in Bhutan and Nepal is trying to send them home.