In the Buddhist tradition of Tibet, Shambhala has three meanings.

Externally, Shambhala was a geographic location, a seat of inspiration where the Buddha taught the Kalachakra Tantra, the Tantra of the Wheel of Time. In the mythology of Bon, the native religion of Tibet, Shambhala was a Central Asian kingdom, the origin and center of the world whence issued all spiritual energies.

Internally, Shambhala is the dharma chakra, located in the heart of all beings. It is the symbol for mind, completing the trinity of body, speech, and mind.

The esoteric meaning of Shambhala is tathagatagarbha, buddha-nature, the essence of all things. It transcends existence and non-existence and is the ground of both samsara and nirvana. According to the Kalachakra Tantra, the Emperor of Shambhala, Rigden, waged war against and subdued the Three Lords of Materialism: the Lord of Form, the Lord of Speech, and the Lord of Mind. In the Dark Age these Three Lords extend their power and seduction, enslaving the human mind with psychological and spiritual materialism. When Shambhala is acknowledged—when buddha-nature shines through—the strategies of the Three Lords become irrelevant and the teachings of the Kalachakra Tantra are realized.