The origin of the Thakalis is not clear, although they claim to be the descendants of Hansraj, a Thakuri prince of the Jumla-Sinja dynasty in western Nepal. The Thakalis were agropastoral people who were engaged in local trade until the early nineteenth century like other neighboring Himalayan Peoples. The rise of Thakali power goes back to the mid-nineteenth century. Nepal was at war with Tibet in 1857 and 1858. One of the Thakali leaders cooperated with the Hindu Rana regime and provided the central government in Kathmandu with valuable information about the Himalayan and Tibetan areas. After the Nepalese victory over Tibet, the Hindu Rana rulers allowed the Thakali leader to obtain a license to import rock salt from Tibet and also granted him the magistracy of the Upper Kali Gandaki Valley and neighboring Panchgaon, Baragaon, Lo, and Dolpo areas with the traditional and hereditary title of Subba. This prerogative was quite helpful in enabling the Subba and his family to carry on large-scale commerce in the Tibet-Himalayan regions. Thus, the Subba family and its descendants exercised political influence not only among the Thakalis but also over their Neighboring ethnic groups in Panchgaon, Baragaon, Lo, and Dolpo. But the political influence of the Thakali leaders and their families gradually diminished after the mass migration of Thakali merchants from Thakhola toward the southern lowlands of Nepal following the 1959 Tibetan affair.
Many of the Thakalis have survived well in the cities and towns of southern Nepal as merchants, hotel owners, public servants, professors, teachers, medical doctors, and so forth, thanks to their hard-working efforts and businesslike attitude.