The word Urabon was probably derived from the Sanskrit Avalambana (All Souls Day), a Buddhist ceremony based on the Avalambana-sūtra (Urabon-kyō in Japanese). The sutra relates the story of Maudgalyāyana, a disciple of the Buddha, who secured his mother's release from hell by having monks offer food, drink, and shelter to the spirits of his ancestors. Though observed as a Buddhist festival, Bon is not exclusively so and reflects the ancient theme of close continuity in Japanese religious life between the living and the dead.

indigenous religion of Tibet that, when absorbed by the Buddhist traditions introduced from India in the 8th century, gave Tibetan Buddhism much of its distinctive character.

The original features of Bon seem to have been largely magic-related; they concerned the propitiation of demonic forces and included the practice of blood sacrifices. Later, there is evidence of a cult of divine kingship, the kings being regarded as manifestations of the sky divinity (reformulated in Buddhism as the reincarnation of lamas); an order of oracular priests (their counterpart, the Buddhist soothsayers); and a cult of the gods of the atmosphere, the earth, and subterranean regions (now lesser deities in the Buddhist pantheon).

In the 8th and 9th centuries, struggles took place between the ruling house of Tibet, whose members sided with Buddhism, and the powerful noble families, who sided with Bon. Enabled by deliberate Buddhist concern for written works, Bon was developed into a systematized religion with specific doctrine and a sacred literature. Although any serious Bon claims to religious supremacy were ended by the late 8th-century persecution by King Khrisong Detsen, it was never completely destroyed and continues to survive both in the aspects of Tibetan Buddhism that are mentioned above and as a living religion on the northern and eastern frontiers of Tibet.