Hinduism became the major religion of India about the same time that caste started. Hindus believe that there are three major gods—the creator god, the destroyer god, and the preserver god. Hinduism teaches respect for every living thing. It teaches that the most important part of every living thing is its soul or spirit, which never dies. Hindus believe that the soul is reborn into some other thing living on earth after the body dies. For example, a merchant could be reborn a farmer, a cow or even an ant.

Hinduism teaches that the form of rebirth depends on how the person has acted in his or her previous life. Caste is held to be an important part of Hinduism, and Hindus believed that being reborn into a lower caste will punish people who break caste rules. But people who act as they should will be rewarded with a higher caste in the next life. However, a young Hindu prince named Siddhartha Gautama put forward a quite different idea. He held that unhappiness was not caused by disobeying caste rules. About 500 BC, he began a search for different ways of life. He was disturbed by the sufferings of the people that he saw around him. So he gave up his wealth and high caste and went to search for the cause of life's unhappiness. After much thought, Siddhartha found an answer. He believed that unhappiness was caused by greed, and if people could be happy with what they had, they could end their unhappiness. This could be done by such rules as self-denial and love for others. Many Hindus were ready to accept new ideas. They listened to the prince, feeling that he had found an important truth. They named him Buddha, which means "enlightened one". Then the Buddha's followers started a new religion called Buddhism.

For a time, Buddhism was the main religion in India. It differed from Hinduism mainly with regard to caste. Buddhist missionaries carried the religion to other parts of the world, including Japan, Southeast Asia, and China, where it later became a major religion.