Traditional Tibetan Buddhism had a hierarchy that begins with the Dalai Lama, followed by the Panchen Lama. They are followed by a higher clergy and a lower clergy, and then by Tibetan Buddhist followers.
The Dalai Lama and the Panchen Lama are both viewed as reincarnations. The Dalai Lama is the reincarnation of all previous lamas starting with Avalokitesvara, the Buddha of Compassion.
The Panchen Lama is the reincarnation of all previous Panchen Lamas starting with Amitabha, the Buddha of Light.
When a Dalai Lama and Panchen Lama dies, leaders seek out their reincarnation among boys in the region. When they find potential candidates they give the child a series of tests to affirm they are reincarnations.
The issue of reincarnation has become political in light of the conflict between China and Tibetan leaders. In 1995, China rejected a boy that the Dalai Lama confirmed as the new Panchen Lama, which led to a selection of a different boy. China later created policy that only monasteries in China could apply for approval for future reincarnations.
In 2007, the Dalai Lama has hinted that his successor or reincarnate could be found before he dies and it could even be a girl.
Tibetan Buddhism Today:
Tibetans and Chinese continue to have conflicts. Most recently, riots in Tibet in March 2008 led to the death of 18 Chinese and the subsequent crackdown by the Chinese military, which Tibetan leaders in exile say have killed more than 140 Tibetans.
Since the riots, Chinese leaders and the Dalai Lama have had three different talks to find a solution to the conflict. To address younger Tibetans in exile who believe that the Dalai Lama could be more forceful, the Dalai Lama called a meeting of exiles in November 2008 to discuss their future.
Following the meeting, most of the members seemed to continue to support the Dalai Lama’s "Middle Path" approach which aims to peacefully resolve the issue by pushing co-existence between Tibetans and the Chinese government.