In 1979 the Institute purchased a plot of land at Rewalsar with the aid of Tibetan and Western friends. Rewalsar is situated near Mandi in Himachal Pradesh. It is within four hours bus journey from Bir and Chauntra where there are Tibetan settlements, and within a day's journey from Manali, Simla and Dharamsala. There are more than one thousand persons dwelling in these are as belonging to families which follow the Drukpa Kargyud order.

Rewalsar is a favourable location for the Institute as it is a holy place blessed by the presence of the great teacher Padmasambhava who meditated in a cave on the hill above Rewalsar. Padmasambhava is revered by all Tibetans as it was he who introduced most of the Buddhist teachings to Tibet during the reign of King Trisong Detsen. Before Padmasambhava went to Tibet, in about 900 AD, he went to Rewalsar where Princess Mandarava, daughter of the King of Mandi (then the kingdom of Zahor) was meditating with her attendants. Padmasambhava gave them teachings. Owing to rumours the king became angry and tried to have Padmasambhava burnt on a huge pyre in a pasture at Rewalsar. Padmasambhava transformed the pasture into a very deep lake and sat unharmed on a lotus-flower floating on the surface. The lake and meditation-cave remain as a pilgrimage place for Buddhists of all nationalities. The lake is known as TSHOPEMA, lotus-lake, to Tibetan. The site of the Institute is within view of the lake and about five minutes walk from it. The climate remains free from extremes of heat and cold. The presence also of mountainside forests nearby and the white ranges of the Himalayans beyond afford an agreeable environment for teachers and students throughout the year.