The Lhasa Apso was one of the first breeds to be used as a companion dog. For many centuries he was kept by Tibetan monks in their isolated monasteries where they served as companions and watchdogs. The breed was credited with spiritual powers and considered to bring prosperity and fortune to the owner, hence it bore the name of Talisman Dog. It was also believed that when monks died they might be reincarnated as one of the monastery dogs.

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The breed was jealously guarded in Tibet and did not reach other countries until the late 19th Century. They were recognised by The Kennel Club in 1908 and classified along with the Tibetan Terrier as Lhasa Terriers. In 1934 the two breeds were divided and both breeds have prospered in the show ring.