Whatever its historical basis, Shambhala gradually came to be seen as a Buddhist Pure Land, a fabulous kingdom whose reality is visionary or spiritual as much as physical or geographic. It was in this form that the Shambhala myth reached the West, where it influenced non-Buddhist as well as Buddhist spiritual seekers — and, to some extent, popular culture in general.
Sambhala (this is the form found in the earliest Sanskrit manuscripts of Kalacakra texts; the Tibetans usually transliterated this as "Shambhala") (Tib. bde 'byung) is a Sanskrit term of uncertain derivation. Commonly it is understood to be a "place of peace/tranquility/happiness". Shakyamuni Buddha is said to have taught the Kalachakra tantra on request of King Dawa Sangpo of Shambhala; the teachings are also said to be preserved there. Shambhala is believed to be a society where all the inhabitants are enlightened, actually a Buddhist Pure Land, centered by a capital city called Kalapa.
The Buddhist myth of Shambhala is adaptation of the earlier Hindu myth of Kalki of Sambhala found in the Mahabharata and the Puranas. The Buddhist version may be a mythicization of an actual culture whose geographical location can be found in Inner Asia.
Shambhala is ruled over by a line of Kings of Shambhala known as Kalki Kings (Tib. Rigden), a monarch who upholds the integrity of the Kalachakra tantra. The Kalachakra prophesies that when the world declines into war and greed, and all is lost, the 25th Kalki king will emerge from Shambhala with a huge army to vanquish "Dark Forces" and usher in a worldwide Golden Age. Using calculations from the Kalachakra Tantra, scholars such as Alex Berzin put this date at 2424 AD.
Manjushri Yashas (Tib. Rigdan Tagpa) is said to have been born in 159 BC and ruled over a kingdom of 300,510 followers of the Mlechha (Yavana or "western") religion, some of whom worshiped the sun. He is said to have expelled all the heretics from his dominions but later, after hearing their petitions, allowed them to return. For their benefit, and the benefit of all living beings, he explained the Kalachakra teachings. In 59 BC he abdicated his throne to his son, Puṇdaŕika, and died soon afterwards, entering the Sambhoga-káya of Buddhahood.
As with many concepts in the Kalachakra Tantra, the idea of Shambhala is said to have "outer", "inner", and "alternative" meanings. The outer meaning understands Shambhala to exist as a physical place, although only individuals with the appropriate karma can reach it and experience it as such. As the 14th Dalai Lama noted during the 1985 Kalachakra initiation in Bodhgaya, Shambhala is not an ordinary country:
Although those with special affiliation may actually be able to go there through their karmic connection, nevertheless it is not a physical place that we can actually find. We can only say that it is a pure land, a pure land in the human realm. And unless one has the merit and the actual karmic association, one cannot actually arrive there.
There are various ideas about where this society is located, but it is often placed in central Asia, north or west of Tibet. Ancient Zhang Zhung texts identify Shambhala with the Sutlej Valley in Himachal Pradesh. Mongolians identify Shambala with certain valleys of southern Siberia. In Altai folklore Mount Belukha is believed to be the gateway to Shambhala. Modern Buddhist scholars seem to now conclude that Shamballa is located in the higher reaches of the Himalayas in what is now called the Dauladhar mountains around Mcleodganj. The current Dalai Lama manages the Tibetan government in exile from Mcleodganj.
The inner and alternative meanings refer to more subtle understandings of what Shambhala represents in terms of one's own body and mind (inner), and the meditation practice (alternative). These two types of symbolic explanations are generally passed on orally from teacher to student.
The first Kalachakra masters of the tradition disguised themselves with pseudonyms, so the Indian oral traditions recorded by the Tibetans contain a mass of contradictions with regard to chronology.
