Historically, Bhutan is said to have derived its name from the Sanskrit Bhotant, meaning 'the end of Tibet', or from Bhu-uttan, meaning 'high land'. Historically too, Bhutan was referred by many names, including "Hidden Holy Land," "The Land of Four Approaches," "The Southern Valley of Medicinal Herbs," and "the Lotus Garden of the Gods." The Bhutanese have always referred to their country as Druk Yul, 'Land of the Thunder Dragon'.

Bhutan's history begins at about 747 AD, when Guru Padma Sambhava, the most revered Buddhist saint in Bhutan and believed to be second Buddha, came from Tibet and introduced Buddhism to the country. He is supposed to have come riding on the back of a flying tigress to subdue the evil spirits who hindered the spread of Buddhism.

Zhabdrung Ngawang Namgyal, a Tibetan warrior-monk of the Drukpa School, arrived in Bhutan in 1616. He unified the country, and established himself as the country's supreme leader and introduced the present dual system of religious and secular government. It was in 1907 when an assembly of representatives of the monastic community, civil servants, and the people, elected Ugyen Wangchuck as the first King of Bhutan.