Traditionally, Mongols practiced a combination of Tibetan Buddhism (also called Vajrayana Buddhism) and shamanism. Tibetan Buddhism shares the common Buddhist goals of individual release from suffering and reincarnation. Tibet’s Dalai Lama, who lives in India, is the religion’s spiritual leader and is highly respected in Mongolia. He visited Mongolia several times, and the last time in 1995 in the company of the famous Hollywood actor, Richard Gere, who is a Buddhist.

At the beginning of the 20th century, Mongolia had hundreds of monasteries, and about half of all men were monks. In the 1930s, the Communist government launched a campaign against Lamaism, Mongolia’s chief religion, and thousands of monks were arrested and executed. By 1945, after the Communist government's religious purge, all but one monastery (Gandan Monastery in Ulaanbaatar) had been closed, although shamanistic practices continued. Worship was forbidden until 1990, when democracy was restored and a religious revival ensued.

Since, when freedom of religion was restored, then Buddhism has rapidly re-established itself, resulting in the construction of dozens of new monasteries and the restoration of temples destroyed in the 1930s. The Buddhist art school in Gandan Monastery is thriving and high lamas from Tibet, Nepal and India has made trips to Mongolia. Many young people are receiving an education through these traditional centers of learning, and boys are increasingly applying to become monks. The new freedom of religion also extends to the Kazak Muslims. Meanwhile many Christian missionaries are seeking new souls in the country and some even have opened their churches.

Like many other Buddhist countries, religion dominates Mongolian arts, including traditional dance. The ancient religious mask dance, or Tsam, is a significant religious ritual which reflects Buddhist teachings through images. It is a theatrical art performed by skilled dancers wearing magnificently ornamented costumes, which represent characters of different holy figures and devils, animals, and people. Through story, music, and dance, the wide range of personalities of the characters are depicted. To symbolize positive and negative attributes, characters from popular stories, and animals such as the Khangarid (lord of flies), lion (the king of wild animal), stag (the beauty among animals), crow (the soothsayer) and various domestic animals are imitated. The colors and decoration of the costumes are clues as to the nature of the personalities of the characters.