Theravada Buddhism is the largest and dominant religion in Laos. Theravada Buddhism is central to Lao cultural identity. The national symbol of Laos is the That Luang stupa, a stupa with a pyramidal base capped by the representation of a closed lotus blossom which was built to protect relics of the Buddha. It is practiced by 66% of the population. Almost all ethnic or "lowland" Lao people (Lao Loum and Lao Lom) are followers of Theravada Buddhism; however, they constitute more than 50% of the population. The remainder of the population belongs to at least 48 distinct ethnic minority groups. Most of these ethnic groups are practitioners of Tai folk religions, with beliefs that vary greatly among groups.

Tai folk religion is predominant among northern groups of Tai people, such as the Thai Dam and Thai Daeng, as well as among Mon-Khmer and Tibeto-Burman groups. Even among lowland Lao, many pre-Buddhist phi religious beliefs have been incorporated into Theravada Buddhist practice. Catholics and Protestants constitute between 1% and 2% of the population. Other minority religious groups include Baháʼí Faith, Islam, Mahayana Buddhism, and Confucianism. A very small number of citizens are atheist or agnostic.

Although the government prohibits foreigners from proselytizing, some resident foreigners associated with private businesses or nongovernmental organizations quietly engage in religious activity. The Lao Front for National Construction is in charge of religious affairs within the country and all religious organizations within Laos must register with it.

Buddhism was introduced to Laos beginning in the eighth century by Mon Buddhist monks and was widespread by the fourteenth century. A number of Laotian kings were important patrons of Buddhism.

Beginning in the late 1950s, the Pathet Lao attempted to convert monks to the leftist cause and to use the status of the sangha to influence the thoughts and attitudes of the populace. The effort was in many ways successful, despite efforts by the Royal Lao Government to place the sangha under close civil administrative control and to enlist monks in development and refugee assistance programs. Political scientist Martin Stuart-Fox attributed the success of the Pathet Lao to the inability of the Lao Loum elite to integrate the monarchy, government, and sangha into a set of mutually supportive institutions.

Popular resentment of the aristocracy, division of the sangha into two antagonistic sects, the low level of its religious education and discipline, and opposition to foreign (i.e., Western) influence all contributed to the receptiveness of many monks to Pathet Lao overtures. The politicization of the sangha by both sides lowered its status in the eyes of many, but its influence at the village level augmented popular support for the Pathet Lao political platform, which paved the way for the change in government in 1975.

The LPDR government's successful efforts to consolidate its authority also continues to influence Buddhism. In political seminars at all levels, the government taught that Marxism and Buddhism were basically compatible because both disciplines stated that all men are equal, and both aimed to end suffering. Political seminars further discouraged "wasteful" expenditures on religious activities of all kinds, because some monks were sent to political reeducation centers and others were forbidden to preach.

The renunciation of private property by the monks was seen as approaching the ideal of a future communist society. However, Buddhist principles of detachment and nonmaterialism are clearly at odds with the Marxist doctrine of economic development, and popular expenditures on religious donations for merit making are also seen as depriving the state of resources. Thus, although overtly espousing tolerance of Buddhism, the state undercut the authority and moral standing of the sangha by compelling monks to spread party propaganda and by keeping local monks from their traditional participation in most village decisions and activities.