The transmigration of living buddhas was institutionalized in the 12th century. It was practiced first among the believers of the Bka'brgyud-pa Sect. But as a pervasive institution being observed by all lamaseries in Tibet was only after the formation of the group of the monasteries of the Yellow Sect. A system has been formed to seek out, recognize and educate the reincarnations. There has been more than ten thousand living buddhas in Tibetan Buddhism.

Early in the 15th century Tsong-kha-ha initiated a reform of Tibetan Buddhism and formed the Yellow Sect (the Dge-lugs-pa). In order to consolidate and develop the Yellow Sect monastery group which is based on the economic independence of the monastery, the Yellow Sect adopted the institution of transmigration of living buddhas. The transmigration of the Dalai Lama and the Panchen Lama are two principal systems of living buddha transmigration for the two leading disciples of Tsong-kha-ha, leader of the Yellow Sect. Historically, the titles of the Dalai Lama and Panchen Erdeni were officially conferred by the Chinese Central Government.