Bhutan has the richest and one of world's finest cultural heritage that has largely remained intact due to its isolation from the rest of the world till early 1960s. One of the main attractions of the tourists in Bhutan is culture and its traditions. the government is increasingly making efforts to sustain the current culture and tradition and Bhutan has aptly been referred to as the 'Last Shangrila'.

While the Bhutanese are free to travel abroad, Bhutan is seen to be inaccessible to foreigners. There is a widespread misperception that Bhutan has set limits on tourist visas. The high tourist tariff and the requirement to go on packaged tours may have created this impression.

The traditional dress for Ngalong and Sharchop men is the gho, a knee-length robe tied at the waist by a cloth belt known as the kera. Women wear an ankle-length dress, the kira, which is clipped at one shoulder and tied at the waist. An accompaniment to the kira is a long-sleeved blouse, the toego, which is worn underneath the outer layer. Social status and class determine the texture, colours, and decorations that embellish the garments. Scarves and shawls are also indicators of social standings, as Bhutan has traditionally been a feudal society. Earrings are worn by females. Controversially, Bhutanese law now requires all Bhutanese citizens to wear these garments in public.

Rice, and increasingly maize, are the staple foods of the country. The diet in the hills also includes chickens, yaks, cows and sheep. Soups of meat, rice, and dried vegetables spiced with chillies and cheese are a favourite meal during the cold seasons. Dairy foods, particularly butter and cheese from yaks and cows, are also popular, and indeed almost all milk is turned to butter and cheese. Popular beverages include butter tea, tea, locally brewed rice wine and beer. Bhutan is the only country in the world to have banned the sale of tobacco.

Bhutan's national sport is archery, and competitions are held regularly in most villages. It differs from Olympic standards not only in technical details such as the placement of the targets and atmosphere. There are two targets placed over 100 metres apart and teams shoot from one end of the field to the other. Each member of the team shoots two arrows per round. Traditional Bhutanese archery is a social event and competitions are organized between villages, towns, and amateur teams. There are usually plenty of food and drink complete with singing and dancing. Wives and supporters of the participating teams cheer. Attempts to distract an opponent include standing around the target and making fun of the shooter's ability. Darts (khuru) is an equally popular outdoor team sport, in which heavy wooden darts pointed with a 10 cm nail are thrown at a paperback-sized target ten to twenty metres away.

Another traditional sport is the digor, which can be best described as shot put combined with horseshoe throwing. Football is an increasingly popular sport. In 2002, Bhutan's national football team played Montserrat - billed as 'The Other Final', the match took place on the same day Brazil played Germany in the World Cup Final, but at the time Bhutan and Montserrat were the world's two lowest ranked teams. The match was held in Thimphu's Changlimithang National Stadium, and Bhutan won 4-0. A documentary of the match was made by the Dutch filmmaker Johan Kramer. Rigsar is the new emergent style of popular music, played on a mix of traditional instruments and electronic keyboards, and dates back to the early 1990s; it shows the influence of Indian popular music, a hybrid form of traditional and Western popular influences. Traditional genres include the zhungdra and boedra.

Characteristic of the region is a type of fortress known as the dzong. This contains the religious and secular administration for each district.

Bhutan has numerous public holidays, most of which centre around traditional seasonal, secular and religious festivals. They include the winter solstice (around January 1, depending on the lunar calendar), the lunar New Year (February or March), the King's birthday and the anniversary of his coronation, the official start of monsoon season (September 22), National Day (December 17), and various Buddhist and Hindu celebrations. Even the secular holidays have religious overtones, including religious dances and prayers for blessing the day.

Masked dances and dance dramas are common traditional features at festivals, usually accompanied by traditional music. Energetic dancers, wearing colourful wooden or composition facemasks and stylized costumes, depict heroes, demons, dæmons, death heads, animals, gods, and caricatures of common people. The dancers enjoy royal patronage, and preserve ancient folk and religious customs and perpetuate the ancient lore and art of mask-making.

Inheritance in Bhutan generally goes in the female rather than the male line. Daughters will inherit their parents' house. A man is expected to make his own way in the world and often moves to his wife's home. Love marriages are the norm. There is no tradition of arranged marriages and, though uncommon, polygamy and polyandry are accepted. This is often a device to keep property in a contained family unit rather than dispersing it. Former King Jigme Singye Wangchuck is married to four sisters.