From the beginning of the fifth century to around the end of the sixth century, northern and southern China came under separate rule. The south remained under native dynasties while non-Chinese rulers controlled the north. The Buddhist in southern China continued to translate Buddhist texts and to lecture and write commentaries on the major texts. Their rulers were devout Buddhists who saw to the construction of numerous temples, participated in Buddhist ceremonies and organized public talks on Buddhism.

In northern China, except for two short periods of persecution, Buddhism flourished under the lavish royal patronage of rulers who favored the religion. By the latter half of the sixth century, monks were employed in government posts. During this period, Buddhist art flourished, especially in the caves at Dun-huang, Yun-gang and Long-men. In the thousand caves at Dun-huang, Buddhist paintings covered the walls and there were thousands of Buddha statues in these caves. At Yun-gan and Long-men, many Buddha images of varying sizes were carved out of the rocks. All these activities were a sign of the firm establishment of Buddhism in China by the end of this period.

With the rise of the Tang Dynasty at the beginning of the seventh century, Buddhism reached out to more and more people. It soon became an important part of Chinese culture and had great influence on Chinese Art, Literature, Sculpture, Architecture and Philosophy of that time.

By then the number of Chinese translations of Buddhist texts had increased tremendously. The Buddhists were now faced with the problem of how to put their teachings into practice. As a result, a number of schools of Buddhism arose, with each school concentrating on certain texts for their study and practice. The Tian-tai school, for instance, developed a system of teaching and practice based on the Lotus Sutra. It also arranged all the Buddhist texts into graded categories to suit the varying aptitude of the followers.

Other schools arose which focused on different areas of the Buddha's teachings. The two most prominent schools were the Ch'an and the Pure Land schools. The Ch'an School emphasized the practice of meditation as the direct way of gaining insight and experiencing Enlightenment in this very life.