Reality in Buddhism is called dharma (Sanskrit) or dhamma (Pali). This word, which is foundational to the conceptual frameworks of the Indian religions, refers in Buddhism to the system of natural laws which constitute the natural order of things. Dharma is therefore reality as-it-is (yatha-bhuta). The teaching of Gautama Buddha constitutes a method by which people can come out of their condition of suffering through developing an awareness of reality (see mindfulness). Buddhism thus seeks to address any disparity between a person's view of reality and the actual state of things. This is called developing Right or Correct View (Pali: samma ditthi). Seeing reality as-it-is is thus an essential prerequisite to mental health and well-being according to Buddha's teaching.

Buddhism addresses deeply philosophical questions regarding the nature of reality. One of the fundamental teachings is that all the constituent forms (sankharas) that make up the universe are transient (Pali: anicca), arising and passing away, and therefore without concrete identity or ownership (atta). This lack of enduring ownership or identity (anatta) of phenomena has important consequences for the possibility of liberation from the conditions which give rise to suffering. This is explained in the doctrine of dependent origination.

One of the most discussed themes in Buddhism is that of the emptiness (sunyata) of form (Pali: rūpa), an important corollary of the transient and conditioned nature of phenomena. Reality is seen, ultimately, in Buddhism as a form of 'projection', resulting from the fruition (vipaka) of karmic seeds (sankharas). The precise nature of this 'illusion' that is the phenomenal universe is debated among different schools. For example;

Buddhist sutras devote considerable space to the concept of reality, with each of two major doctrines—the Doctrine of Dependent Origination (pratitya-samutpada) and the Doctrine of Cause and Effect (karma and vipaka)—attempting to incorporate both the natural and the spiritual into its overall world view. Buddhist teachings continue to explore the nature of the world and our place in it.

The Buddha promoted experience over theorizing. According to Karel Werner in his text "Mysticism and Indian Spirituality",

Experience is ... the path most elaborated in early Buddhism. The doctrine on the other hand was kept low. The Buddha avoided doctrinal formulations concerning the final reality as much as possible in order to prevent his followers from resting content with minor achievements on the path in which the absence of the final experience could be substituted by conceptual understanding of the doctrine or by religious faith, a situation which sometimes occurs, in both varieties, in the context of Hindu systems of doctrine.

The Mahayana developed those statements he did make into an extensive, diverse set of sometimes contrasting descriptions of reality "as it really is." For example, in Tibetan Buddhism the Gelugpa draw a distinction between Svatantrika-Prasaṅgika in Madhyamika philosophy. This distinction was most prominently promulgated by Je Tsongkhapa (1357–1419 CE), when he argued that this distinction can be found explicitly and implicitly in the works of Nagarjuna, Chandrakirti, and Buddhapalita.

The Theravada school teaches that there is no universal personal god. The world does not have its origin in a primordial being such as brahman or the creator god. What is seen is only a product of transitory factors of existence, which depend functionally upon each other. The Buddha is said to have said: "The world exists because of causal actions, all things are produced by causal actions and all beings are governed and bound by causal actions. They are fixed like the rolling wheel of a cart, fixed by the pin of its axle shaft." (Sutta Nipata 654)