As a proof, history of Bhutan dates as far back as the 6th century A.D., whereas the real chronological history starts with the beginning of Buddhism from 7th century A.D. From that time, Buddhism has largely shaped the history of Bhutan and the lifestyle of its people.
It is assumed that the country acquired the name 'Bhutan' from the Sanskrit word 'Bhu-Uttan' which means 'High Land'. One more theory says that it comes from the Sanskrit word 'Bhots-ant' meaning 'end of Tibet or south of Tibet'. Yet, to the Bhutanese themselves, their country is known as "Druk Yul" which signifies ‘land of Dragon’ and its people as 'Drukpa', a reference to the central branch of Tibetan Buddhism which is still practiced in the Himalayan kingdom
The two monasteries, the Kyichu Lhakhang in Paro and Jambay Lhakhang in Bumthang which were built in the 7th Century A.D are the benchmark and remarkable leftovers of the history of Bhutan, today. Coming to the 8th century, Buddhism took firm root in the country. The great Tantric spiritualist, Guru Padmasambhava (more widely known as Guru Rimpoche in Bhutan) came in flying on the back of a tiger and landed in Taktsang, Paro, where the Taktsang monastery, one of the most admired holy sites and the most notable religious and historical icon of Bhutan, stands today. The Kurjey Lhakhang in Bumthang is another vital spot of pilgrimage where Guru Rimpochey had meditated, subdued the evil spirits and left the imprint of his body on a rock. Temples and monasteries dating from the 8th century still stand as honored places in contemporary Bhutan.
With the onset of Shabdrung (literally mean ‘at whose feet one submits’) Rimpochey from Tibet in 1616 opened the most vibrant era in the history of Bhutan. He was to become the first person to bring all parts of Bhutan under one central authority and unify the 'country'. His 35 year reign also saw the founding of a national management, aspects of which still persist, and the building of Dzongs. The Shabdrung put up several Dzongs, monasteries, and religious institutions bringing people from almost every walk of life under one faith and firmly instituted Drukpa Kagyu as the state religion. In fact, many of the Dzongs we see today were built during the Shabdrung's reign, although some renovations were carried out.
For centuries, Bhutan was made up of warfare regions until it was amalgamated under King Ugyen Wangchuck in 1907. The British exercised some power over Bhutan's affairs, but never colonized it. Until the 1960s, Bhutan was basically out-of-the-way from the rest of the world, and its people lived with tranquil, conventional way of life, farming and trading, which had remained unharmed for centuries. When China attacked Tibet, however, Bhutan fortified its relationship with India in an attempt to stay away from Tibet's upshot. In the 1960s, Bhutan also took on social transformation, abolishing slavery and the caste system, liberating women, and endorsing land reform. In 1985, Bhutan made its first diplomatic links with non-Asian countries.
And, a pro-democracy movement emerged in 1991; the government passed a decree for Nepali immigrants. Consequently, some 100,000 Nepali civil servants were either dispossessed or encouraged to move abroad. Most of them returned back to Nepal, where they were housed in UN-administered refugee camps. In 1998, King Jigme Singye Wangchuck, who is Bhutan's fourth inherited ruler, willingly condensed his absolute monarchy, and in March 2005 released a draft constitution that sketched plans for the country to reallocate two-party democracy. In Dec. 2006, he gave up in favor of his son, and Crown Prince Jigme Khesar Namgyal Wangchukin became king. Bhutan has made tremendous progress in the field of communications, hydro-electric power development, education, health, financial sector, environmental protection, and industrial and infrastructural development during his reign. Coming to this era, the country has harmony and stability, and its security and independence has been guaranteed.