The Buddhist movement that became known as Mahayana (Great Vehicle) and also the Bodhisattvayana, began sometime between 150 BCE and 100 CE, drawing on both Mahasamghika and Sarvastivada trends. The earliest inscription which is recognizably Mahayana dates from 180 CE and is found in Mathura.

The Mahayana emphasized the Bodhisattva path to full Buddhahood (in contrast to the spiritual goal of arhatship). It emerged as a set of loose groups associated with new texts named the Mahayana sutras. The Mahayana sutras promoted new doctrines, such as the idea that "there exist other Buddhas who are simultaneously preaching in countless other world-systems". In time Mahayana Bodhisattvas and also multiple Buddhas came to be seen as transcendental beneficent beings who were subjects of devotion. Mahayana remained a minority among Indian Buddhists for some time, growing slowly until about half of all monks encountered by Xuanzang in 7th-century India were Mahayanists. Early Mahayana schools of thought included the Mādhyamaka, Yogācāra, and Buddha-nature (Tathāgatagarbha) teachings. Mahayana is today the dominant form of Buddhism in East Asia and Tibet.

Central Asia was home to the international trade route known as the Silk Road, which carried goods between China, India, the Middle East and the Mediterranean world. Buddhism was present in this region from about the second-century BCE. Initially, the Dharmaguptaka school was the most successful in their efforts to spread Buddhism in Central Asia. The Kingdom of Khotan was one of the earliest Buddhist kingdoms in the area and helped transmit Buddhism from India to China. King Kanishka's conquests and patronage of Buddhism played an important role in the development of the Silk Road, and in the transmission of Mahayana Buddhism from Gandhara across the Karakoram range to China. Mahayana Buddhism spreads to Central Asia.