Lying 20 kilometers (12 miles) south of Shigatse, the monastery was founded in 1040 by Chetsun Sherab Jungnay. Shalu, meaning New Bud in Tibetan, was named after a story. His teacher suggested him to built a monastery where his arrow hit. The flying arrow finally hit a new bud. In 1320, Buton Rinpoche, one of the greatest religious scholars was invited to be abbot of the monastery. Buton's religious knowledge covered so wide a range that he brought together the one hundred and eight volumes of the fundamental texts of Buddhism, Kanjur, and the two hundred volumes of "treaties and commentaries", Tenjur, and attracted over 3,000 monks to attend his teachings. Shulupa, or Butonpa took form under his leadership. However since he had no interest in politics, his sect was not very influential. The most magic feats of Shalupa were monks learned to raise their body temperature to such a level that they wore the simplest clothing to resist coldness and to run at superhuman leaps to cover a long range without rest. In 1329, the monastery was demolished in an earthquake and in 1333, Buton rebuilt it under the patron the Chinese Mongolian emperor. Since many Chinese Han artisans participated the reconstruction the monastery combined Tibetan and Chinese style of the Yuan dynasty (1271-1368) together, the only one of its type existing in Tibet.

Shalu Lakhang is the center of the monastery. On the ground floor, in the Tshomchen, Sakyamuni and his disciples are enshrined. The chapels flanking it houses Tanjur and Kanjur respectively. Chapels on the roof floor are typical Chinese blue tiled structures, housing Sakyamuni, Buton, and Arhats. Massive delicate and old murals cover the walls of the monastery, mostly depicting stories from the life of the Buddha. Restoration and preservation are badly needed to protect those arts.

Shalu has four treasures, which are a sutra board, which is 700 years old and cannot be reassembled once broken apart, a piece of sutra printed against the board regarded a good luck; a brass urn, which is usually covered with a piece of red cloth and sealed, the holy water may clean 108 filths and is changed every 12 years; a stone basin, which was Chetsun Sherab Jungnay's washbasin; and a stone tablet, which was uncovered in the first construction of Shalu and on which a mantra, om mani Padme Hum and four dagobas are carved.