When monastic discipline had once more declined in Tibet, Je Tsong Khapa founded the Gelug schoold in the 15th century. The Gelug School is the largest of the four main schools of Tibetan Buddhism.

Tsongkhapa (rJe Tsong-kha-pa Blo-bzang grags-pa) (1357-1419) started a reform that developed into the New Kadam (bKa’-gdams gsar-pa) or Gelug (dGe-lugs) Tradition. He advocated strict adherence to monastic discipline and clarified many of the deepest points of Buddhist philosophy and tantric practice. He told his monk disciples to wear yellow hats. He explained that this would be an auspicious sign for them to be able to bring back pure ethical discipline to the monasteries of Tibet, just as Lumey had done in earlier times. In this way, the Gelug tradition also became known as the Yellow Hat Tradition.

This tradition integrates the methodical study and practice of the sutras and tantras as transmitted by Je Tsong Khapa and his successors. The Gelug School is based in part upon the older Kadam lineage which derived from the teachings of Jowo Je Atisha.

The Gelug School places great emphasis on philosophical study of the classical Indian treatises, especially on Madhyamika (the Middle Way philosophy of Nagarjuna) and the view of shunyata (emptiness). Strict following of the monastic code (Vinaya) is also stressed. Within the Gelug tradition of Vajrayana, the three main deity practices are Guhyasamaja, Chakrasamvara and Yamantaka; with Kalachakra also being emphasised.

Je Tsong Khapa’s followers were first known as the Gadenpas or Riwo Gadenpas, after the monastery of Gaden which Je Tsong Khapa founded. Only later did his followers become known as the Gelugpas, the Virtuous Ones, because of their emphasis on the Vinaya teachings, and the Yellow Hats because of their yellow ceremonial hats.

Quickly spreading through the activity of Je Tsong Khapa’s many illustrious disciples, the Gelug School eventually became the predominant school in Tibet, with major centres around Lhasa and in Amdo.

Je Tsong Khapa’s main disciples included Tokden Jampal Gyatso, Gyaltsap Je, Khedrup Je, Jamyang Choje Tashi Palden (who founded Drepung Monastery in 1416), Jamchen Choje Shakya Yeshe (who founded Sera Monastery in 1419), and Gendun Drup (who founded Tashilhunpo Monastery at Shigatse in 1447, and who eventually became known as the First Dalai Lama).

Kumbum Jampaling was founded at Tsongkhapa’s birthplace in 1583 by His Holiness the Third Dalai Lama, Sonam Gyatso. Jamyang Sheypa Ngawang Tsöndrü founded Labrang Tashikhyil Monastery in Amdo in 1710.

Other important Gelugpa masters also included the later Dalai Lamas and Panchen Lamas.

The monastic education system in the Gelug monasteries covers five major topics, based on five great Indian scriptural texts studied through the medium of logic and debate – "tsennyi" (mtshan-nyid, definitions) in Tibetan. During the course of study, monastics also learn the four Indian Buddhist tenet systems (grub-mtha’ bzhi): Vaibhashika (Bye-brag smra-ba), Sautrantika (mDo-sde-pa), Chittamatra (Sems-tsam-pa), and Madhyamaka (dBu-ma).

In Tibet, this education was only for monks. Since the reforms of the Fourteenth Dalai Lama in India, Gelug nuns are also beginning to follow this course of study. In Tibet, nuns mostly only memorized and performed rituals.

The five main subjects are as follows:

Prajnaparamita (phar-phyin), far-reaching discriminating awareness, is the study of the stages and paths of mind (sa-lam) needed for the realization of voidness, liberation, and enlightenment. It is based on Filigree of Realizations (mNgon-rtogs-rgyan, Skt. Abhisamayalamkara) by Maitreya (rGyal-ba Byams-pa). Although Maitreya’s text is written from a Prasangika-Madhyamaka (dBu-ma thal-‘gyur-pa) viewpoint, its twenty-one Indian commentaries are written from the Svatantrika-Madhyamaka (dBu-ma rang-rgyud-pa) point of view, and most prominently its Yogachara-Svatantrika (rNal-‘byor spyod-pa’i rang-rgyud-pa) division.

Madhyamaka (dbu-ma), the middle way, is the study of voidness according to the Prasangika-Madhyamaka view. The Svatantrika division studied in conjunction with this is Sautrantika-Svatantrika (mDo-sde spyod-pa’i rang-rgyud-pa). Madhyamaka study is based on A Supplement to (Nagarjuna’s "Root Verses on) the Middle Way" (dBu-ma-la ‘jug-pa, Skt. Madhyamakavatara) by Chandrakirti (Zla-ba grags-pa, dPal-ldan grags-pa).

Pramana (tshad-ma), valid cognition, is the study of the proofs for the validity of such essential points as the Three Supreme Gems, rebirth, and omniscience. It is based on A Commentary to (Dignaga’s "Compendium of) Validly Cognizing Minds" (Tshad-ma rnam-‘grel, Skt. Pramanavarttika) by Dharmakirti (Chos-kyi grags-pa). Several of its chapters are from the Sautrantika viewpoint and others the Chittamatra.

Abhidharma (mngon-par chos, mdzod), special topics of knowledge, covers the physical and mental constituents of limited beings, rebirth states, karma, disturbing emotions and attitudes, paths to liberation, and so on. It is based on A Treasure House of Special Topics of Knowledge (Chos mngon-pa'i mdzod, Skt. Abhidharmakosha) by Vasubandhu (dByigs-gnyen) and is from the Vaibhashika viewpoint.

Vinaya (‘dul-ba), rules of discipline, concerns the monastic vows. It is based on The Vinaya Sutra (‘Dul-ba’i mdo, Skt. Vinayasutra) by Gunaprabha (Yon-tan ‘od).