The Democratic Reform was conducted in Tibet in 1959. The following year the city of Lhasa was formally established, and in 1965 the Tibet Autonomous Region was founded.

In 1964, the Preparatory Committee for the founding of the Tibet Autonomous Region and Lhasa City formed a joint office to direct urban construction in Lhasa. Six major roads were built around the Potala Palace. They included about 100,000 square meters of roads paved with asphalt and around 50,000 square meters of a commercial street that was named Renmin Road and later renamed Yutog Road. A new town, which is three times larger than the old urban area, bloomed between the Jokhang Monastery and the Potala Palace. Whenever farmers came to the new town, they were amazed to see the new outlook of Lhasa. Based on these changes, a play, named Visiting the New City, was written; the play is still in production today.

During the "cultural revolution'' (1966-76), which threw all of China into chaos, urban construction was suspended in Lhasa. As in other cities in China, urban residents lacked an adequate supply of daily needs. However, even during this period of turmoil, the Central Government didn't forget to finance construction in other parts of Tibet. An oil pipeline went from Qinghai to Lhasa via the Kunlunshan and Tangula Mountains under the loving care of Premier Zhou Enlai. In 1976, the 1,000-km-long oil pipeline went into service, giving "blood'' to Lhasa.