Ullambana celebration has its origin in Buddhism. Ullambana Sutra is a discourse given by the Buddha principally to the Venerable Mogallana on the practice of filial piety. In the sutra, Ven. Mogallana knowing that his mother was full of greed and meanness use his deva vision to find his deceased mother. In his vision he saw that his mother had fallen into the realm of the hungry ghost (Peta). He immediately went to his mother with rice in an alms bowl. His mother was very pleased to see Mogallana. She did not want to share the food with all the other hungry ghosts so she covered the bowl with her left hand after receiving it from Mogallana. However, when she tried to eat the food with her right hand, the food turned into charcoal.

Filled with grief, Mogallana begs Syakymuni Buddha to show him a way to bring salvation to his mother. The Buddha explained to Mogallana that his mother's offences were very great and that Mogollana himself alone could not save her. He would need the help of other Sangha members. The Buddha advised Mogallana to offer rice, fruits other delicacies as well requisites to all the Sangha members in the ten directions. Only the meritorious power of these monks, who hold the precepts completely and purely, can deliver his mother from the great sufferings in the lower realms.

In this way, Mogallana succeeded in rescuing his mother from the hungry ghost realm. Mogallana then asked the Buddha if future followers of Buddha could also practice the Ullamabana offerings. The Buddha replied very gladly that all followers should follow the practice as it would bring similar benefits to the practitioner's parents of the seven births.

In the Sigalovada Sutta, it is stated that the duty of transferring merits to the parents and other relatives falls on the living members of the family. Thus Buddhists undertake to follow different religious functions to transfer merits to the departed so that they may be well and happy. It has become a custom for Buddhists to participate in religious practices and transferring the accrued merits to the intended departed ones. This practice guides the living members to be moral and religious in their day-to-day dealings. At the end of the day both parties benefit from it, as the transference of merits is also a meritorious act.