The city is the traditional seat of the Dalai Lama and in Tibetan Buddhism is regarded as the holiest centre in Tibet. The city is home to about 255,000 inhabitants and, at an altitude of approximately 3,650 m (12,000 ft), is one of the highest cities in the world.

Lhasa literally means "place of the gods", although ancient Tibetan documents and inscriptions demonstrate that the place was first called Rasa, which means "courtyard place" or "goat place".

Over the centuries, Lhasa became a political and religious center of Tibet. Administrative orders were issued from the myriad of imposing palaces; the great temples and monasteries were home to omnipotent liturgical establishment and witnessed the rise of many religious leaders and endless religious ceremonies.

The tourism industry now brings significant business to the region, building on the attractiveness of the Potala Palace, the spectacular Himalayan landscape, and the many wild plants and animals native to the high altitudes of Central Asia. Many of Lhasa's rural residents practice traditional agriculture and animal husbandry. Lhasa is also the traditional and current hub of the Tibetan trading network. For many years, chemical and automobile plants operated in the area, because the city's remoteness allowed them to pollute with minimal restriction. However, this has changed in recent years. Copper, lead, and zinc are mined nearby, and the Chinese government is experimenting with new methods of mineral mining and geothermal heat extraction in the area.