Dharamsala's earliest history is obscured by time and the successive invasions that swept through all North India. But it is known that the original tribes identified with Kangra's hilly tracts were Dasas, a warrior people, later assimilated by Aryans.
In 1849 the British posted a regiment in Dharamsala, but the place was not to remain a military cantonment for long. By 1855 it was a small but flourishing hill station and the administrative headquarters of Kangra District, which had been annexed by the British in 1848. The two main areas at the time were McLeod Gunj, named after Lieutenant-Governor of Punjab, David McLeod, and Forsyth Gunj, named after a divisional commissioner.

Lord Elgin, Viceroy of British India and a former Governor-General of Canada, loved the forests of Dharamsala so much that, before dying here in 1863, he asked to be buried in the graveyard of St. John's Church in the Wilderness. Had he lived longer, Dharamsala might have become the summer capital of British India.
The name Sir Francis Younghusband - leader of British India's fateful incursion to Lhasa in 1904 - also has Dharamsala connections. In 1856 his parents, Clara Shaw and John Younghusband, lived in a bungalow in the pine forest above St. John's Church and later bought land in the Kangra Valley to pioneer a tea plantation. Clara's brother, Robert Shaw, was a renowned explorer of Central Asia and an early Kangra tea planter.

But in 1905 a severe earthquake changed the face of Dharamsala. Many buildings collapsed and the whole settlement, once ravaged, was never re-occupied. The local officials advised residents to move to the safety of Lower Dharamsala which at that time comprised little more than a jail, a police station and a cobbler's shop. The pine-clad hillsides continued to flourish as a quiet health resort for the "sahibs" and "memsahibs" of British India.
The visits of "sahibs" and "memsahibs" ended when India achieved independence in 1947. McLeod Gunj then quickly became a sleepy, undistinguished village until His Holiness the Dalai Lama, fleeing persecution in his homeland, made it his home in exile and moved the Central Tibetan Administration, in effect the Tibetan Government-in-Exile, from Mussoorie to Dharamsala in 1960. Today, more than 8,000 Tibetan refugees consider Dharamsala their second home.

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Dharamsala is situated in the northern Indian state of Himachal Pradesh. It lies on a spur of the Dhauladhar range, the Pir Panjal region of the Outer Himalayas; and commands majestic views of the mighty Dhauladhar ranges above, and the Kangra Valley below. Dhauladhar means "white ridge" and this breathtaking, snow-capped range rises out of the Kangra Valley to a height of 5,200 meters (17,000 feet).
The Kangra Valley is a wide, fertile plain, criss-crossed by low hills. The scenery touched the heart of a British official who wrote: "No scenery, in my opinion, presents such sublime and delightful contrasts. Below lies the plain, a picture of rural loveliness and repose... Turning from this scene of peaceful beauty, the stern and majestic hills confront us... above all are wastes of snow to rest on.Dharamsala is divided into two very different parts. Kotwali Bazaar and areas further down the valley (at the average height of 1,250 metres) are called Lower Dharamsala, while McLeod Gunj (at the height of nearly 1,800 metres) and surrounding areas are known as Upper Dharamsala. McLeod Gunj is nine kilometers by bus route and four kilometres by taxi route up the hill from Kotwali Bazaar. While inhabitants of Lower Dharamsala are almost all Indians, McLeod Gunj is primarily a Tibetan area. McLeod Gunj is surrounded by pine, Himalayan oak, rhododendron and deodar forests. The main crops grown by local Indians in the valleys below McLeod Gunj are rice, wheat and tea. Today, streams of Tibetan refugees from all over the world flock to McLeod Gunj to receive blessings and teachings from His Holiness the Dalai Lama. Western and Indian tourists and scholars come here to see the rebirth of an ancient and fascinating civilization. The high altitude and cool weather contribute physically to this recreation of the original Tibetan environment. Dharamsala pulsates with the sights and sounds of old Tibet. Though certainly more modern, life is basically Tibetan in character. Shops strung out along the narrow streets of McLeod Gunj sell traditional Tibetan arts and handicrafts and the aroma of Tibetan dishes lingers in the air.