The religion Buddhism founded by Siddhartha Gautama known as "Buddha" entered China, almost 500 years after his death. Buddhism had already spread north and west into Central Asia and it was inevitable that Buddhist missionaries would travel the great trade routes east into the Han Empire. There are no references to an early Buddhist presence in the official Confucian literature, but other sources do speak of an oral transmission of the scriptures in 2 BCE, and of a Buddhist community in 65 CE.

Around 150 CE Buddhist missionary monks established a translation center at the Han Dynasty capital Loyang, and from the work done there two movements arose, the Dhyana and the Prajna. The first was based on Theravada Buddhist texts on meditation (Skt. dhyana) and breathing techniques. Although customarily called the Dhyana School, it is more properly thought of as a sustained engagement on the part of the Chinese, indulged by the translators, with the theoretical and practical details of Buddhist meditation. The Chinese were greatly interested in these techniques, primarily because of the similarities between them and the practices taught by their own indigenous religion, Taoism. The Prajna, or Wisdom, School, again not a single institution, constituted the other major trend in Han Buddhism. This movement focused on the Prajnaparamita Sutras, or Perfection of Wisdom Scriptures, of Mahayana Buddhism. These were predominantly philosophical works primarily concerned with expounding the doctrine that the ultimate nature of reality is "empty" (Skt. sunyata; Ch. kung) of any independent existence. These texts caught the attention of the Chinese, again partly because of similarities with their own inheritance, this time with the philosophies of the Taoists Lao-tzu and Chuang-tzu.

In 220 CE the Han Dynasty fell and the country fragmented into three mutually antagonistic states. A brief period of unity followed under the Western Chin (265-317 CE) before non-Chinese tribes overran the north, causing many educated Chinese to flee south. Thus began a nearly three hundred-year division of China into a north ruled by non-Chinese, and a south, ruled by the Chinese themselves.

This prolonged period of strife and disunity, so trying for the populace, proved to be of benefit to the new religion. During the Han Dynasty Buddhism had made only limited progress, and the numbers of converts made, and monasteries built, were relatively small. One of the reasons for this was that several features of Buddhism were inimical to the dominant Confucian ideology. When the Confucian Han fell therefore, the doors of opportunity opened for Buddhism, which itself offered more to the ordinary people than did Confucianism? It taught that a better life, and ultimately salvation, were possible for everyone, and provided the means to attain these things: meditation, moral discipline productive of good karma, and, most appealing of all, kind and compassionate deities - the Buddha Amitabha and Bodhisattvas such as Maitreya. Also attractive were Buddhism’s festivals and rituals, as indeed were its monasteries, which were places of refuge for many during the troubled times. To the intellectuals it offered a more developed religious philosophy than that of Taoism, and, perhaps most important of all, to the state it represented a force for order and peace.