Indian prince Siddhartha Gantama founded Buddhism in 556BC and by AD2 it had spread to China amongst the imperial family, nobles and scholars. Emperor Mingdi of the Han dynasty was a devout Buddhist and dispatched an embassy to India in a quest for eminent Buddhist teachers. Before arriving in India, his envoys met two distinguished Indian Buddhist missionaries who were invited to meet the emperor. Buddhism spread to the common people once the sutras the two priests carrying were translated into Chinese. Preaching to the commoners began and Buddhism expanded. Buddhism influenced Confucianism and Taosim, and was in turn influenced by them, from this Buddhism became Sinicized.

Buddhism increased in popularity from the 3rd to 6th century and many temples were built across China. In the middle of 3rd century, the first Han Chinese men were initiated into the Buddhist priesthood and the first Han women  became nuns in the 4th century. Monk Dao'an established an doctrine that prohibited monks and nuns from eating fish and meat. It was during the Sui and Tang dynasties that Buddhism in China reached its height of influence and splendor.

Xuan Zang, a famous Chinese monk, undertook an epic pilgrimage to India that lasted 17 years. He brought back to China a wealth of sutras and translated them into Chinese, greatly contributing to the development of Buddhism in China. Eventually eight schools of Buddhism developed in China, the Three-Treatises, Dharmalaksana, Avatamsaka, Vinaya, Tiantai, Tantra, Pure Land and Chan, which is also known by its Japanese name , Zen. Buddhism became throughly Sincized, no longer relying on Indian sources and became a huge influence on China's politics, economy, culture and society.

Before Buddhism spread into Tibet around the 7th or 8th centuries from central China and Nepal, the Tibetans practiced Bon, a multi-theistic religion. Princess Wenchang became an important figure in spreading Buddhism to Tibet when Tang dynasty emperor Taizong gave her in marriage to Songtsen Gampo, King of the Tibetan Tubo Kingdom. She brought to Lhasa many Buddhist artifacts and help convert the Tibetans. Padmasambhaava(莲花生), an ancient Indian monk, combined Tantra with the local Bon religion. His Buddhist preaching was popular among Tibetans because he adapted many native Bon rituals and ideas. This developed into Tibetan Buddhism, which is also known as Lamaism because the monks are called Lamas.

Ethnic minority groups living in southwest China later adopted Buddhism and from ancient India, Buddhism spreaded to SriLanka, Burma, Tailand and other Southeast Asian countries.

The Rise of Taoism   

Taoism originated in the 2nd century AD as the Eastern Han dynasty began falling apart. As the empire fell into feuding kingdoms, two peasant rebellions broke out in Hebei and Sichuan provinces; one was based on Taiping Taoism and the other on Wudoumi Taoism. They raised Laozi, a Chinese philosopher of the Spring and Autumn Period, as the forefather of Taoism. According to the Tao Te Jing, which gradually lost its peasant rebellion origins became a religion based on the Tao. Zhang Daoling, founder of Wudoumi Taoism, as the Celestial Master and take the Tao Te Jing as their bible. In the book, "tao" is the origin of the universe and the creator of all living beings. Taoism also adopted nature and ancestor worship from the earlier Chinese beliefs, they also believed men could attain immorality and become a celestial beings by living an austere life.

The emperors of past dynasties bestowed the title Celestial Master to the descendents of Zhang Daoling in order to canonize Taoism where it became known as " tianshidao" or " zhengyidao." In the middle of the 12th century, the Taoist Wang Chongyang laid the foundations for the Quanzhen school of Taoism by proposing that Taoists should also adhere to tenets of Buddhism and Confucianism; that Taoists should remain celibate, only live with other Taoists, become vegetarians and adopt other austerities. Taoism then became divided into two schools, Quanzhen and Zhenyi.