What is the difference between Daoism and Buddhism?

The short answer: Buddhism came from India, Daoism did not. Buddhism aims at release from rebirth; Daoism, in its religious form, aims at alignment with the Dao and, in some lineages, at transcendence achieved within a body. They arrived at their overlap by centuries of contact, not by common descent.

The confusion is not the reader’s fault. The two traditions have shared physical space for over a thousand years. A single temple may hold a Buddhist bodhisattva, a Daoist star lord, and a local earth god on three altars, tended by the same caretaker, visited by the same family in one afternoon. Practice in China has rarely required picking a side.

The differences that survive that mixing are structural. Buddhism has karma and rebirth through six realms; the goal is to stop the cycle. Daoism has a celestial bureaucracy with ranks and offices; petitions are filed, merit is recorded, and the ideal outcome for an adept is not escape from the world but a changed relationship to it. Buddhism came with scripture translated from Sanskrit and Pali. Daoism has its own canon, the Daozang, compiled in China.

Where they genuinely merged, we say so. The ten courts of the underworld are the clearest example: a Buddhist hell built on a Daoist bureaucratic frame with indigenous ghost beliefs filling the gaps. Calling that structure "Buddhist" or "Daoist" would both be wrong. It is syncretic, and that is a real category, not a way of avoiding the question.

One warning about a common shortcut. Yin-yang, the Five Phases, qi and the Yijing are frequently offered as "the Daoist part" of Chinese thought. They are not Daoist in origin — they are older and wider than either tradition, and Confucians, physicians and farmers used them too. Daoists drew on that shared inheritance, as did everyone else.