The distinction is actually Chinese. The Chinese differentiated between the yellow-hatted Gelugpa order and the red-hatted Kagyupa order - disputants for religious and political ascendancy until the 17th century Mongol intervention - through their headgear. By extension, the distinction identified the Gelugpa as the Yellow Hats and all other Tibetan schools of Buddhism as Red Hats.

It is a distinction that makes little sense of the complexity of Tibet's religious orders. Confusion also arises due to the fact that the Karmapa, head of the Karma. Kagyupa sub-order, is often referred to as the Black Hat lama. It makes a lot more sense to see the major orders of Tibetan Buddhism, not in terms of their dress sense, but in terms of their respective historical rise to power.

The Nyingmapa order, then, is the oldest of the Tibetan schools of Buddhism, tracing its origins back to the early establishment of Buddhism in the reign of King Songtsen Gampo. Tibetans sometimes refer to this school as the Old School. The middle period of the second diffusion of Buddhism in the 11th century saw the rise of the New School Sakyapa and Kagyupa orders. The 15th century search for doctrinal purity gave rise to the Gelugpa order, which by the 17th century had become dominant in Tibet.