Bhutan has a short history of modernization, having embarked on planned development six decades ago. For centuries, it remained secluded from the outside world, partly because of its landlocked position, but mainly due to lack of modern transport and communication infrastructure. From such lowly beginnings, Bhutan has made a quantum leap into the 21st century. What triggered this rapid development, and how the country managed to follow a distinctive path of development, is what this chapter is about. The country’s visionary kings initiated Bhutan’s fast-paced development. In particular, the development journey was inspired by the philosophy of Gross National Happiness (GNH) enunciated by the Fourth King Jigme Singye Wangchuck, who believed in promoting happiness and well-being of the people as the main goal of development. The GNH-based development philosophy has shaped the country’s development vision, strategies, goals, plans, and programmes. Unlike the GDP-based model of development, which measures progress in terms of material prosperity, the GNH model includes the dimensions of happiness and well-being. This chapter dwells on how the vision of GNH is pursued through different initiatives under the four areas of development: sustainable and equitable socio-economic development, environmental conservation, preservation and promotion of culture, and good governance. The chapter presents major challenges and enumerates relevant strategies to overcome those challenges in ways that are environmentally friendly, culturally acceptable, and financially sustainable.