Historical evidence show that the university was established by Gupta kings around 450 CE. With dormitories, Nalanda was the world’s first residential universities. It accommodated more than 10,000 students and 2000 teachers.

The curriculum of the Nalanda contained virtually the entire range of world knowledge then available. Courses were drawn from every field of learning, Buddhist and Hindu, sacred and secular, foreign and native. Students studied science, astronomy, medicine, and logic as diligently as they applied themselves to metaphysics, philosophy, Samkhya, Yoga-shastra, the Veda, and the scriptures of Buddhism. They also studied foreign philosophy.

When Huan Tsang stayed at Nalanda and studied with the abbot Shilabhadra, it was already a flourishing centre of learning. In many ways it seems to have been like a modern university. There was a rigorous oral entry examination conducted by erudite gatekeepers (according to historians the teachers would pose as gatekeepers), and many students would be rejected after failing the gate-test. To study or to have studied at Nalanda was a matter of great prestige. However, no degree was granted nor was a specific period of study required. Time was measured by a water clock.

There were schools of study in which students received explanations by discourse. There were also schools of debate, where the mediocre were often humbled, and the conspicuously talented distinguished. Accordingly, the elected abbot was generally the most learned man of the time.

The libraries were vast and widely renowned, although there is also a legend of a malicious fire in which many of the texts were destroyed and irrevocably lost.

During the Gupta age, the practice and study of the Mahayana, especially the madhyamaka, flourished. However, from 750 AD, in the Pala age, there was an increase in the study and propagation of the tantric teachings. This is evidenced by the famous pandit Abhayakaragupta, a renowned tantric practitioner who was simultaneously abbot of the Mahabodhi, Nalanda and Vikramashila monasteries. Naropa, later so important to the tantric lineages of the Tibetan traditions, too was abbot of Nalanda in the years 1049-57.

Much of the tradition of Nalanda had been carried into Tibet by the time of the Muslim invasions of the twelfth century. While the monasteries of Odantapuri and Vikramashila were then destroyed, the buildings at Nalanda do not seem to have suffered extensive damage at that time, although most of the monks fled before the invaders. In 1235 the Tibetan pilgrim Chag Lotsawa found a 90 year old teacher, Rahula Shribhadra, with a class of seventy students. Rahula Shribhadra managed to survive through the support of a local brahmin and did not leave until he had completed educating his last Tibetan student.

A large number of ancient Buddhist establishments, stupas, chaityas, temples and monastery sites have been excavated and they show that this was one of the most important Buddhist centres of worship and culture. Regarding the historicity of Nalanda, we read in Jaina texts that Mahavira Vardhamana spent as many as fourteen rainy seasons in Nalanda.

Most of the vajrayayana teachings stems from Nalanda. The scholar Dharmakirti (circa 7th century), one of the Buddhist founders of Indian Philosophical logic and primary theorist of Buddhist atomism, taught here. Guru Padmasambhava (called Guru Rinpoche by the Tibetan school of Buddhists) who is widely worshipped as second Buddha in the Himalya, was a teacher at Nalanda. Other forms of Buddhism, like the Mahayana followed in Vietnam, China, Korea and Japan, found their genesis within the walls of the ancient university.

Theravada Buddhism (popular in Sri Lanka, Thailand, Mayanmar) was taught at Nalanda University. But the teachings of Theravada were not developed further in Nalanda, as Nalanda was not a strong center of Theravada.

Due to the disappearance of Buddhism from India during the 12th century, the university was in decline. In 1193, the Nalanda University suffered a final blow after the complex was sacked by Muslim invaders under Bakhtiyar Khilji; this event is seen as a milestone in the decline of Buddhism in India. When the Tibetan translator Chag Lotsawa visited Nalanda in 1235, he found it damaged and looted, but still functioning with a small number of monks. Another historian blames the destruction of the temples, monasteries, centers of learning at Nalanda and northern India for the demise of ancient Indian scientific thought in mathematics, astronomy, alchemy, and anatomy. Ling and Scott (historians) however, point out that centres of learning were already declining, before the presence of Muslims.

Nalanda is being revived

• On December 9, 2006, the New York Times detailed a plan in the works to spend $1 billion to revive Nalanda University near the ancient site. A consortium led by Singapore and including China, India, Japan and other nations will attempt to raise $500 million to build a new university and another $500 million to develop necessary infrastructure.
  
• On June 12, 2007, News Post India reported that the Japanese diplomat Noro Motoyasu said that "Japan will fund the setting up an international university in Nalanda in Bihar". The report goes on to say that "The proposed university will be fully residential, like the ancient seat of learning at Nalanda. In the first phase of the project, seven schools with 46 foreign faculty members and over 400 Indian academics would come up." ... "The university will impart courses in science, philosophy and spiritualism along with other subjects. A renowned international scholar will be its chancellor."
  
• On August 15, 2007, The Times of India reported that Dr A.P.J. Abdul Kalam (Ex-president of India) has accepted the offer to join the revived Nalanda International University.

Latest Developments

To trace the location of the buried ancient structures of Nalanda, scientists from the National Remote Sensing Agency (NRSA) have started conducting a ground-penetrating radar (GPR) survey. According to the officials of the Archaeological Survey of India (ASI), a five-member team of scientists from the NRSA has begun a four-day GPR survey. This survey is being conducted for the first time in Bihar. It has proved beneficial across the world in exploration of archaeological structures.

The survey would be conducted on two mounds–– Garhpar and Rukministhan––located in the vicinity of Nalanda town.