Mcleodganj also known as upper Dharamsala is the most Tibetan of places in India. In the times of British rule Upper Daramsala was a "hill station", a place where wives and daughters of British officers and government officials spent hot Indian summers.

Marvelously scenic, especially upper Dharamsala is well wooded with oak, cedar, pine and other timber yielding trees and offers some lovely walks and finer views. In 1855, Dharamsala had only two major areas where civilians settled in: Mcleodganj, named after Lieutenant Governor of Punjab "David McLeod", and Forsyth Ganj, named after a Divisional Commissioner.

Lord Elgin, the British Viceroy of India (1862-63) fell in love with the natural beauty of Dharamsala because of its likeness with Scotland, his home in England. Lord Elgin died in 1863 while on a tour. He now lies buried in the graveyard of St. John's Church-in-Wilderness which stands in a cozy pine grove between McLeod Ganj and Forsyth Ganj. A Legend has it that Lord Elgin liked Dharamsala so much that he had sent a proposal to the British monarch to make Dharamsala the summer capital of India. However, the proposal was ignored. By 1904, Forsyth Ganj and McLeod Ganj had become nerve centers of trade , business and official work of Kangra District, But on April 4,1905, as a result of a severe earthquake, whole of the area was devastated. Alarmed at the massive destruction, the British government decided to shift the district headquarter offices to the lower reaches of spur. As a result, the present-day district courts and kotwali bazaar areas came into being which earlier had only a jail, a police station and cobbler's shop to boast of. Until India attained independence from Britain on Aug. 15,1947 Mcleodganj and Forsyth Ganj continued to serve as health resorts and resting places for the British Rulers. But all this changed when the government of India decided to grant political asylum to the 14th Dalai Lama, Tenzin Gyatsho, in 1959. In 1960, he was allowed to make Mcleodganj his headquarters. After his arrival, trade, commerce and tourism picked up afresh. Because with the Dalai Lama came thousands of Tibetan refugees, who gradually settled in Mcleodganj. During the last three decades, The Tibetans have built many religious, educational and cultural institutions in and around Mcleodganj, which has helped in preservation of their culture. This has been a keen area of interest for the people around the world and as a result they flock at Dharamsala at various times.

In the first years of Indian independence, the place quickly lost its importance. In 1959 after the Chinese invasion to Tibet, the Dalai Lama fled from Tibet to India and was offered the former hill station, now known as Mcleodganj, as a place of residence of the Tibetan exile government.