Although its early history is vague, Bhutan seems to have existed as a political entity for many centuries. At the beginning of the 16th cent. it was ruled by a dual monarchy consisting of a Dharma Raja, or spiritual ruler, and a Deb Raja, or temporal ruler. For much of its early history the Deb Raja held little real power, as the provincial governors ( ponlops ) became quite strong. In 1720 the Chinese invaded Tibet and established suzerainty over Bhutan. Friction between Bhutan and Indian Bengal culminated in a Bhutanese invasion of Cooch Behar in 1772, followed by a British incursion into Bhutan, but the Tibetan lama's intercession with the governor-general of British India improved relations.
In 1774 a British mission arrived in Bhutan to promote trade with India. British occupation of Assam in 1826, however, led to renewed border raids from Bhutan. In 1864 the British occupied part of S Bhutan, which was formally annexed after a war in 1865; the Treaty of Sinchula provided for an annual subsidy to Bhutan as compensation. In 1907 the most powerful of Bhutan's provincial governors, Sir Ugyen Wangchuk, supported by the British, became the monarch of Bhutan, the first of a hereditary line. A treaty signed in 1910 doubled the annual British subsidy to Bhutan in return for an agreement to let Britain direct the country's foreign affairs.
After India won independence, a treaty (1949) returned the part of Bhutan annexed by the British and allowed India to assume the former British role of subsidizing Bhutan and directing its defense and foreign relations; the Indians, like the British before them, promised not to interfere in Bhutan's internal affairs. When Chinese Communist forces occupied Tibet in 1950, Bhutan, because of its strategic location, became a point of contest between China and India. The Chinese claim to Bhutan (as part of a greater Tibet) and the persecution of Tibetan Buddhists led India to close the Bhutanese-Tibetan border and to build roads in Bhutan capable of carrying Indian military vehicles. In the 1960s, Bhutan also formed a small army, trained and equipped by India. The kingdom's admission to the United Nations in 1971 was seen as strengthening its sovereignty, and by the 1980s relations with China had improved significantly.
Bhutan's third hereditary ruler, King Jigme Dorji Wangchuk (reigned 1953–72), modernized Bhutanese society by abolishing slavery and the caste system, emancipating women, dividing large estates into small individual plots, and starting a secular educational system. Although Bhutan no longer has a Dharma Raja, Buddhist priests retain political influence. In 1969 the absolute monarchy gave way to a "democratic monarchy." In 1972 the crown prince, Jigme Singye Wangchuk, became the fourth hereditary king of Bhutan upon his father's death; he was crowned in June, 1974. The new king gradually democratized the Bhutanese government. By 1999 the king was no longer head of government; that position was held by head of the cabinet, which is responsible to the national assembly. Since then the country has moved slowly toward adopting a new constitution; in 2005 the draft of the proposed constitution was released.
Meanwhile, an uprising by the Nepalese minority in 1989, a national policy of forcing non–ethnic Bhutanese to adopt Bhutanese Buddhist traditions, and the expulsion of thousands of ethnic Nepalese regarded by the government as illegal aliens were a source of tension within Bhutan, and with Nepal and India, in the 1990s. Also, Assamese and West Bengali separatist guerrillas have established bases in Bhutan, from which they make attacks into India. After attempts to negotiate the Assamese guerrillas' withdrawal failed, Bhutan mounted attacks (2003) to demolish their bases. An agreement between Bhutan and Nepal in 2003 permitted some of the ethnic Nepalese expelled from Bhutan and living in refugee camps in Nepal to return to Bhutan, but most remained in the camps; some began being resettled abroad in 2008. In late 2005 the king announced plans to abdicate in favor of his son in 2008, when the first democratic elections for a parliament are to held. However, at the end of 2007 the king stepped down and was succeeded by Crown Prince Jigme Kesar Namgyel Wangchuk (the formal coronation occurred a year later). Bhutan subsequently signed a revised treaty with India that gave Bhutan greater control over its foreign policy.
In Dec., 2007, the country began its transition to constitutional monarchy with nonpartisan elections for the National Council. Elections for the National Assembly were held in Mar., 2008; nearly all the seats were won by Bhutan Prosperity (or Bhutan Harmony) party (DPT), whose leader, Jigme Thinley, had twice previously served as prime minister. In the July, 2013, elections, the People's Democratic party (PDP) won a majority; PDP leader Tshering Tobgay became prime minister.