Unlike most of Muslim-majority Indonesia, about 83.5% of Bali's population adheres to Balinese Hinduism, formed as a combination of existing local beliefs and Hindu influences from mainland Southeast Asia and South Asia. Minority religions include Islam (13.3%), Christianity (1.7%), and Buddhism (0.5%).These figures do not include immigrants from other parts of Indonesia.

When Islam surpassed Hinduism in Java (16th century), Bali became a refuge for many Hindus. Balinese Hinduism is an amalgam in which gods and demigods are worshipped together with Buddhist heroes, the spirits of ancestors, indigenous agricultural deities and sacred places.

Religion as it is practised in Bali is a composite belief system that embraces not only theology, philosophy, and mythology, but ancestor worship, animism and magic. It pervades nearly every aspect of traditional life. Caste is observed, though less strictly than in India. With an estimated 20,000 puras (temples) and shrines, Bali is known as the "Island of a Thousand Pura", or "Island of the Gods".

Balinese Hinduism has roots in Indian Hinduism and in Buddhism, and adopted the animistic traditions of the indigenous people. This influence strengthened the belief that the gods and goddesses are present in all things. Every element of nature, therefore, possesses its own power, which reflects the power of the gods. A rock, tree, dagger, or woven cloth is a potential home for spirits whose energy can be directed for good or evil.

Balinese Hinduism is deeply interwoven with art and ritual. Ritualizing states of self-control are a notable feature of religious expression among the people, who for this reason have become famous for their graceful and decorous behaviour. Apart from the majority of Balinese Hindus, there also exist Chinese immigrants whose traditions have melded with that of the locals. As a result, these Sino-Balinese not only embrace their original religion, which is a mixture of Buddhism, Christianity, Taoism and Confucianism, but also find a way to harmonise it with the local traditions. Hence, it is not uncommon to find local Sino-Balinese during the local temple's odalan. Moreover, Balinese Hindu priests are invited to perform rites alongside a Chinese priest in the event of the death of a Sino-Balinese. Nevertheless, the Sino-Balinese claim to embrace Buddhism for administrative purposes, such as their Identity Cards.