The Living Buddha reincarnation system is the most obvious feature where Tibetan Buddhism differs from other Buddhism sects.

Tibetan Buddhism has many sects, which have introduced their own system for disciples to take over the teaching from their masters so as to safeguard their established interests and defend their rule. This constitutes one of the social factors contributing to the introduction of the Living Buddha reincarnation system.

Garma Gagyu was the first sect to introduce the system, and others then followed suit, with the procedures used to find the reincarnated soul boys gradually becoming more complicated. After the Gelug Sect gained complete control in the 17th century, this reincarnation system became a means for ruling class of Tibet to scramble for power and wealth. To overcome the disadvantages and hidden political dangers incurred by the Living Buddha reincarnation system, the Qing Dynasty promulgated the 29-Article Ordinance for More Effective Governing of Tibet in 1793, providing a system of drawing lot from a golden urn to determine the soul boy of a deceased Living Buddha.

In 1992, the State Council Bureau of Religious Affairs approved the succession of the 17th Karmapa Living Buddha. In 1995, the TAR, with State Council approval, accomplished the search for the conferment and enthronement of the 11th Panchen Erdeni using the procedure if drawing a lot from the golden urn.