The term "Dambadarjailin" translates to "developing religion" in Mongolian. The first and second leaders of Buddhism in Mongolia were both chosen from Mongolia and hailed as Bogd Khans or Javzandamba Khutagts. G. Zanabazar (1635-1723) was the first leader, followed by Luvsandambiidonme (1724-1758). The Manchu Emperor performed a significant ritual for the young Second Bogd Khan when he was just five years old, transferring all power and privileges from the First Bogd Khan to him to continue and advance Buddhism across the country. A monastery was constructed in honor of the Second Javzandamba Khutagt and named "Dambadarjailin Monastery" by the Manchu Emperor after the Second Bogd Khan's passing in 1759.

The monastery was erected at the confluence of the River Selbe in the northern part of the city and completed in 1765. Unfortunately, during the political repression of 1937-1938, the monastery suffered, with several monks being executed, temples being closed, and valuable relics and sutras being burnt. During the socialist era, the monastery's buildings were repurposed as resorts and hospitals. After Mongolia's Democratic Revolution, restoration efforts were undertaken by some monks, and the government commemorated the 240th anniversary of the monastery's establishment in 2005. Presently, over 50 monks oversee the daily religious activities at Dambadarjailin Monastery.