Sometime during Nanzhao period, the Dali region became a Buddhist kingdom. But when and how did Buddhism actually arrive in Dali? On this topic central to understanding the Nanzhao and the Dali Kingdom, historians remain divided, reflecting not only the scarcity of historic material, but perhaps also political considerations.
Today, Buddhism is clearly present in the Dali region, but it is probably more correct to say that different schools of Buddhism are present. Han Chinese Buddhism is certainly present, its carriers mostly Han residents, but few Bai or Yi people follow this branch. The Bai people worship the Benzhu, local patron saints, but will also self-identify as Buddhists. Statues to Guanyin 观音 can be found in many temples, and a specific depiction of Guanyin as a slender male figure has been unique to Dali since the Nanzhao period. But there is also the presence of some unique deities, such as Daheitian 大黑天, which is not common to Chinese Buddhism, but believed to be a direct import from India, a personification of Shiva. In fact, if one follows the definitions in 史波: 神鬼之祭: 西南少数民族传统宗教文化研究 then both Azhali and the Benzhu cult have a close relationship to witchcraft and sorcery.
The Three Pagodas just outside the town of Dali are perhaps the most visible signs of early Buddhism in Dali, but historical written records as well as cultural artefacts all bear witness that Buddhism became the predominant religion of the Dali region sometime during the period of the Nanzhao Kingdom.
The Qing/Republican Era historian Yuan Jiagu claims, based on the account of the Ming scholar Chen Ding who travelled extensively in Yunnan in the early 18th century, that Buddhism entered Yunnan already in the 5th century BCE as a disciple of Buddha came to Jizushan to meditate. But even if this was the case: the main question is not if it is possible that a monk arrived in Yunnan at that time from India, but whether he left any lasting legacy. There is no archeological or textual evidence that Buddhism was present at Jizushan at that time.
Before Nanzhao, historians largely agree, the religion practices in the Dali region was some sort of semi-organized witchcraft combined with animism, traces of which can still be found in contemporary Dali culture. An important scroll depicting the arrival of Guanyin 观音 in the form of a monk from India and giving his blessing to the founder of Nanzhao is thought to date to 801, even though the extant copy (which is in the Palace Museum in Taipei) is from the Ming dynasty. There is also confusion around the dating of the central of the Three Pagodas in Dali, something not least owed to the confusing calendrical systems in use during the time.
In his seminal 大理古代文化史, the Yunnan historian Xu Jiarui 徐霞瑞, resolutely states that, because of religious similarities, the origins of Dali's Buddhism lie in Chinese Central Plain, but then immediately goes on not only to point out the significant differences between Chinese and Nanzhao Buddhism, but also to discuss the three main routes that Buddhism could have taken to Yunnan (). As Buddhism originated in India, he identifies three main routes to Yunnan:
In fact, as 李家瑞: 南诏以来来云南的天竺僧人 shows, there is plenty of textual evidence that Buddhist monks came directly from India, via the Burma route, into Yunnan.