When Islam triumphed over Hinduism in Java (16th century), Bali became a refuge for many Hindu nobles, priests, and intellectuals. Today it is the only remaining stronghold of Hinduism in the archipelago, and Balinese life is centred on religion—a blend of Hinduism (especially that of the Shaivite sect), Buddhism, Malay ancestor cult, and animistic and magical beliefs and practices. Places of worship are numerous and widespread, and there is a firm belief in reincarnation. Caste is observed, though less strictly than is the case in India, because nine-tenths of the population belong to the Sudra, the lowest caste. The nobility is divided into priests (Brahman), the military and ruling royalty (Kshatriya), and the merchants (Vaishya). Some Muslims and Chinese live in northern and western Bali, and there are a few Christians. The Balinese language is distinct from that of eastern Java, but the upper-class form contains many Javanese and Sanskrit words.

The two major towns are Singaraja and Denpasar, the provincial capital; others include Klungkung, a centre of wood carving and gold and silver industries; Gianyar, with a lively market; Kuta, Sanur, and Nusa Dua, centres of the flourishing tourist trade; and Ubud, in the foothills, a centre for European and American artists, with a fine art museum. All Balinese villages have temples and an assembly hall, usually located on a square that serves for festivals and markets. Each family lives in its own compound surrounded by earthen or stone walls.

The Balinese are fond of music, poetry, dancing, and festivals, are extraordinarily able in arts and crafts, and are passionately fond of betting games, especially cockfighting. A typical Balinese gamelan (orchestra) consists of various percussion instruments, a two-string violin, and a flute; and every village has its gamelan club. Stage plays and, especially, dancing are an integral part of Balinese life, serving magico-religious purposes or telling stories by pantomime. The artistic temperament is also evident in sculpture, painting, silverwork, and wood carving and bone carving and in the animal-shaped wooden coffins in which corpses are carried to the cremation ground.

Visited by Chinese traders and Indian literati, the Balinese had embraced Hinduism by the 7th century AD. Mahendradatta, the mother of Airlangga (who ruled Java from 1019 to c. 1049), married Udayana, the Balinese king, and many Javanese Hindus immigrated to Bali. In 1284 Kertanagara, last king of Tumapel (Singhasari) in Java, captured Bali; upon his death in 1292, the island regained its independence. Bali came under the rule of the Majapahit empire of eastern Java in 1343 and continued under the Majapahits until the empire was overthrown in 1478 by Muslims. The Dutch first visited Bali in 1597, when the island was divided among a number of warring Muslim states. The Dutch annexed the northern Balinese states of Buleleng and Jembrana in 1882, and, in the 1894 Dutch invasion of nearby Lombok Island, the Balinese prince, Anak Agung Ktut, was killed. In 1906 the Dutch attacked Denpasar, massacred about 3,600 Balinese, and captured the whole island. Bali was occupied by the Japanese during World War II. In 1946 a battle was fought between Dutch troops and Indonesian revolutionary forces at Marga in western Bali. The island became part of the Republic of Indonesia in 1950. A terrorist (terrorism) bombing on the island in 2002 killed some 200 people. Area propinsi, 2,175 square miles (5,633 square km). Pop. (2000) propinsi, 3,151,162; (2005 est.) 3,315,700.