In March 1850, the area was annexed by the British after the Second Anglo-Sikh War, and soon a subsidiary
cantonment for the troops stationed at Kangra was established on the slopes of Dhauladhar, on empty land, with
a Hindu resthouse or dharamshala; hence the name for the new cantonment, Dharamshala. During the British rule
in India, the town was a hill station where the British spent hot summers, and around the late 1840s, when the
district headquarters in Kangra became overcrowded, the British moved two regiments to Dharamshala.
A cantonment was established in 1849, and in 1852 Dharamshala became the administrative capital of
Kangra district. By 1855, it had two important places of civilian settlement, McLeod Ganj and Forsyth Ganj,
named after a Divisional Commissioner. In 1860, the 66th Gurkha Light Infantry, later renamed the historic
1st Gurkha Rifles, was moved to Dharamshala.
Soon, 14 Gurkha paltan villages were established nearby and the Gurkhas patronised the ancient Shiva temple of Bhagsunath.