Early records suggest scattered clusters of inhabitants had already settled in Bhutan when the first recorded settlers arrived 1,400 years ago. Bhutan's indigenous population is the Drukpa. Three main ethnic groups;

1: The Sharchops
2: Ngalops
3: The Lhotsampas

make up today's Drukpa population. Bhutan's earliest residents, the Sharchops (people of the east) reside predominantly in eastern Bhutan. Their origin can be traced to the tribes of northern Burma and northeast India. The Ngalops migrated from the Tibetan plains and are the importers of Buddhism to the kingdom. Most of the Lhotsampas migrated to the southern plains in search of agricultural land and work in the early 20th century.

Bhutan's official language is Dzongkha. The current population is approximately 750,000. Given the geographic isolation of many of Bhutan's highland villages, it is not suprising that a number of different dialects have survived. Bhutan has never had a rigid class system. Social and educational opportunities are not affected by rank or by birth. Bhutanese women enjoy equal rights with men in every respect. To keep the traditional culture alive, Bhutanese people wear the traditional clothing that has been worn for centuries. Bhutanese men wear a gho, a long robe tied around the waist by a small belt called a kera. A woman's ankle length dress is called a kira, made from beautifully colored and finely woven fabrics with traditional patterns.

Necklaces are fashioned from corals, pearls, turqoise, and the precious agate eye stones which the Bhutanese call 'tears of the gods' or dzi beads. Bhutan's society is made up of four broad but not necessarily exclusive groups: the Ngalop, the Sharchop, several aboriginal peoples, and Nepalese. The Ngalop (a term thought to mean the earliest risen or first converted) are people of Tibetan origin who migrated to Bhutan as early as the ninth century. For this reason, they are often referred to in foreign literature as Bhote (people of Bhotia or Tibet). The Ngalop are concentrated in western and northern districts. They introduced Tibetan culture and Buddhism to Bhutan and comprised the dominant political and cultural element in modern Bhutan.

The Sharchop (the word means easterner), an Indo-Mongoloid people who are thought to have migrated from Assam or possibly Burma during the past millennium, comprise most of the population of eastern Bhutan. Although long the biggest ethnic group in Bhutan, the Sharchop have been largely assimilated into the Tibetan-Ngalop culture. Because of their proximity to India, some speak Assamese or Hindi. They practice slash-and-burn and tsheri agriculture, planting dry rice crops for three or four years until the soil is exhausted and then moving on.

The third group consists of small aboriginal or indigenous tribal peoples living in scattered villages throughout Bhutan. Culturally and linguistically part of the populations of West Bengal or Assam, they embrace the Hindu system of endogamous groups ranked by hierarchy and practice wet-rice and dry-rice agriculture. They include the Drokpa, Lepcha, and Doya tribes as well as the descendants of slaves who were brought to Bhutan from similar tribal areas in India. The ex-slave communities tended to be near traditional population centers because it was there that they had been pressed into service to the state. Together, the Ngalop, Sharchop, and tribal groups were thought to constitute up to 72 percent of the population in the late 1980s.

The remaining 28 percent of the population are of Nepalese origin. Officially, the government stated that 28 percent of the national population was Nepalese in the late 1980s, but unofficial estimates ran as high as 30 to 40 percent, and Nepalese were estimated to constitute a majority in southern Bhutan. The number of legal permanent Nepalese residents in the late 1980s may have been as few as 15 percent of the total population, however. The first small groups of Nepalese, the most recent major groups to arrive in Bhutan, emigrated primarily from eastern Nepal under Indian auspices in the late nineteenth and early twentieth centuries.

Mostly Hindus, the Nepalese settled in the southern foothills and are sometimes referred to as southern Bhutanese. Traditionally, they have been involved mostly in sedentary agriculture, although some have cleared forest cover and conducted tsheri agriculture. The most divisive issue in Bhutan in the 1980s and early 1990s was the accommodation of the Nepalese Hindu minority. The government traditionally attempted to limit immigration and restrict residence and employment of Nepalese to the southern region. Liberalization measures in the 1970s and 1980s encouraged intermarriage and provided increasing opportunities for public service. More in-country migration by Nepalese seeking better education and business opportunities was allowed.