Geologically, Pangong Tso was formed millions of years ago when the Indian tectonic plate collided with the Eurasian plate, uplifting the Himalayas and trapping ocean waters. Over millennia, as the surrounding glaciers melted and evaporated in the arid climate, the lake became an endorheic basin, causing minerals to concentrate and the water to become saline.
Historically, the region surrounding the lake has been traversed by the Changpa nomads, a Tibetan-origin pastoralist community that has grazed yaks and pashmina goats in the high-altitude Changtang plateau for centuries. The borders in this remote region were largely undefined until the 19th century. Following the Dogra-Tibetan War (1841–1842), the Treaty of Chushul established the traditional boundary between the Kingdom of Ladakh (part of the Dogra Empire) and Tibet, running through the Pangong region.
In modern history, Pangong Tso has been a focal point of Sino-Indian border disputes. During the 1962 Sino-Indian War, China captured significant portions of the eastern lake and the surrounding Aksai Chin region. The lake is divided into sections by mountain spurs, known locally as "Fingers." Tensions flared significantly in 2020–2021 when a severe military standoff occurred between Indian and Chinese forces along these fingers. Following diplomatic and military negotiations, partial disengagement was achieved, though it remains one of the most sensitive and highly militarized borders in the world. Tourism on the Indian side only opened to the general public in the late 20th and early 21st century and surged dramatically post-2009.

