The Balinese are Hindu yet their religion is very different from that of the Indian variety. There is a caste system, but there are no "untouchables" and occupation is not governed by caste.

In fact, the only thing that reflects the caste system is the language which has three tiers; 95% of all Balinese are Hindu Dharma, and speak Low or Everyday Balinese with each other; Middle Balinese is used for talking to strangers, at formal occasions or to people of the higher Ksatriya caste; High Balinese is used when talking to the highest class, the Brahmana, or to a pedanda (priest). It may sound complicated, but most of the words at the low and medium levels are the same, whereas High Balinese is a mixture of Middle Balinese and Kawi, an ancient Javanese language.

The main religion is Agama Hindu Dharma, which arrived in Bali with the spread of Hinduism via Sumatra and Java during the 11th century. Although originally from India, the Balinese religion is a unique blend of Hindu, Buddhist, Javanese and ancient indigenous beliefs, with customs that are very different from the traditional form of Hinduism practiced in India today.

The Balinese worship Brahmana, Shiva and Vishnu, who are seen as manifestations of the Supreme God Sanghyang Widhi. Ganesha (the elephant-headed god) is also visible, but more commonly, one will see shrines to the many gods and spirits that are uniquely Balinese. The Balinese believe strongly in magic and the power of spirits and much of the religion is based upon this. There is a belief that good spirits dwell in the mountains and that the seas are home to demons and ogres.

Most villages have at least three main temples; one, the Pura Puseh or "temple of origin", faces the mountains and is dedicated to the village founders, another, the Pura Desa or village temple, is normally found in the centre and is dedicated to the welfare of the village, the last, the Pura Dalem, is aligned with the sea and is dedicated to the spirits of the dead. Aside from these "village" temples, almost every house has its own shrine and you can also find monuments dedicated to the spirits of agriculture, art and all other aspects of life. Some temples, Pura Besakih for example, on the slope of Mount Agung, are considered especially important and people from all over Bali travel to worship there.

"Offerings" play a significant role in Balinese life as they appease the spirits and thus bring prosperity and good health to the family. Everyday small offering trays (canang sari) containing symbolic food, flowers, cigarettes and money, are placed on shrines, in temples, outside houses and shops, and even at dangerous crossroads.

Festivals are another great occasion for appeasing the gods, where woman bear huge, beautifully arranged, pyramids of food, fruit and flowers on their heads. There are traditional dances and music and the gods are invited to come down to join in the festivities. There are many festivals that are well worth observing.