Making a Tibetan rug is an ancient art and craft in the tradition of Tibetan people. These rugs are primarily made from Tibetan highland sheep's virgin wool. The Tibetans use rugs for almost any domestic use from flooring to wall hanging to horse saddles. The process of making tibetan rugs is unique in the sense that almost about everything is done by hand. But with the introduction of modern technology, a few aspects of the rug making processes have been taken over by machine primarily because of cost, disappearance of knowledge etc. However, some new finishing touches are also made possible by machine.

With Tibet's occupation by Chinese communists in early 1950, Tibetan refugees started migrating to India and Nepal. With them they also brought their knowledge of rug making. Currently in Nepal the rug business is one of the largest industries in the country and there are many rug exporters. Originally they were made with Chinese influence or related to Buddhism. Back in the early 1990's when Tibetan rugs started being produced in non-traditional Tibetan designs and colors for the American market. They started using modern and decorative designs and colors that were an instant hit with American designers and customers. Today, Tibetan rugs are selling very well. The rugs are made in 60-100 knot qualities using fine wool and excellent craftsmanship.

The distinguishing characteristics of Tibetan rugs are their vivid colors, huge and few motifs, and relatively plain and dominant backgrounds.The designs are strongly influenced by Chinese and East Turkestan styles and can either be geometric or curvilinear. The different types of rugs include the medallions, the flower and rosettes, the mythological animal and birds, the geometrical designs, and the rugs used in monasteries for ceremonial purposes.