Leh was for centuries an important stopover on trade routes along the Indus Valley between Tibet, Kashmir, India and China. The main goods carried were salt, grain, pashm or cashmere wool, charas or cannabis resin from the Tarim Basin, indigo, silk yarn and Banaras brocade.

Although there are a few indications that the Chinese knew of a trade route through Ladakh to India as early as the Kushan period (1st to 3rd centuries CE), and certainly by the Tang dynasty, little is actually known of the history of the region before the end of the 10th century, when Tibetan prince Skyid lde nyima gon , a grandson of the anti-Buddhist Tibetan king, Langdarma, founded the kingdom. He conquered Western Tibet, although his army originally numbered only 300 men. Several towns and castles are said to have been founded by Nyima gon, and he apparently ordered the construction of the primary sculptures at Shey. “In an inscription, he says he had them made for the religious benefit of the Tsanpo (the dynastical name of his father and ancestors), and of all the people of Ngaris (Western Tibet). This shows that already in this generation Langdarma’s opposition to Buddhism had disappeared. Shey, 15 km east of modern Leh, was the ancient seat of the Ladakhi kings.