Yumbulagang, reputed to be the first palace in Tibet history, is also one of the oldest buildings in Tibet. Lying 12 kilometers southwest of Tsedang, it perches on a small hill east of the Yarlong River. The soaring building is a legendary palace built in the 2nd century by the Bon followers, for the first Tibetan king - Nyatri Tsenpo, who was said to have descended from Heaven. Later it became the summer palace of Songtsen Gampo and Princess Wencheng. Legend has it that in the fifth century, a Buddhist sutra fell from the sky onto the roof of Yambu Lakang. Nobody could read the book. However a sage predicted it would be interpreted between 7th and 8th century, and the sutra was kept secured in the palace. After Songtsen Gampo transferred his capital to Lhasa, Yumbu Lakang became a chapel and was converted to a Gulugpa monastery during the reign of the Fifth Dalai Lama.

Tibet kings and their ministers are enshrined in a small chapel. Upstairs is a small chanting hall, which houses Sakyamuni and Chenrezi. A mural gallery above tells Nyatri Tsenpo's arrival from the sky and other stories about him as well as on other aspects of Tibetan history.