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Regarding Mt. Wudang as its birthplace, this sect was called the Wudang Tradition. Mt. Wudang, also called Mt. Taihe, was a sacred site of Daoism, and even before the Ming dynasty was honoured as the birthplace of the Great Perfect Warrior Emperor of the Mysterious Northern Heaven. Historically, Daoism on Mt. Wudang was affiliated to The Orthordox Oneness Sect in earlier times, and to The Complete Perfection Tradition in later times. During emperor Zhengzong's era (AD 998-1022), the Orthodox Oneness sect spread to Mt. Wudang and developed into the main power of Daoism on Mt. Wudang, under which the Elder Mao sect, the Three Mao sect and the Lay Daoist Priest Tradition emerged. The Complete Perfection spread to this area 200 years later. During the Hongwu era of the Ming dynasty (AD 1368-1398 AD), Qiu Yuanqing, the fourth generation patriarch of the Dragon Gate branch, became master of Jade Dragon Temple on Mt. Wudang. In the middle of the Ming dynasty, the Dragon Gate had replaced the Orthodox Oneness sect, becoming the main power of Daoism on Mt. Wudang.


During the Yongle ear of Ming emperor Chengzu (AD 1403-1424), Zhang Sanfeng, a Daoist of the Complete Perfection sect, founded the Wudang Tradition, a new Daoist sect which differed from the Complete Perfection sect in religious theories and rules as well as sectarian style. The Wudang Tradition attributed its origin to Cheng Tuan's Daoist sect, but then the government put it under the Complete Perfection sect.


The Wudang Tradition was characterized by its worship for the Great Perfect Warrior Emperor, its practice of Chinese Inner School Boxing, its advocacy of the Integration of the Three Doctrines and its emphasis on Cultivation and Refinement of Inner Alchemy and Spiritual Nature. It was a new sect of the Complete Perfection Tradition which emerged between the Yuan and Ming dynasties. According to the General Summary of Perfect Men and Sects, the Wudang Tradition had as many as eight branches, among which the Spontaneity sect, the Sanfeng sect, the Renewal sect and the Penglai sect lasted until modern times.