The Swaminarayan Sampraday began as the Uddhav Sampraday and was led by Ramanand Swami. In 1799, Swaminarayan, then known as Neelkanth Varni, was initiated into the Uddhav Sampraday as an ascetic (Sadhu) by his guru, Ramanand Swami, and given the name "Sahajanand Swami". At the age of 21, Neelkanth Varni was given the leadership of the sect known as Uddhav Sampraday with the blessings of Ramanand Swami, who handed him control of the religious diocese shortly before his death. Fourteen days after Ramanand Swami died, Neelkanth Varni, now known as Sahajanand Swami, held a large gathering of followers at the town of Faneni. It was during this meeting that Swaminarayan introduced what he termed "the father of all Mantras", and then he was known as Swaminarayan. It should be noted that there was no swami who he had appointed his successor or as an ideal devotee at that time. The name refers wholly and solely to one entity, Swaminarayan. Thereafter the name "Swaminarayan Sampraday" came into existence.

The Swaminarayan Sampraday has its roots in the Vedas. It follows the Vaishnava tradition and to its followers represents a form of Hinduism. The faith focuses on salvation through total devotion (or bhakti) to the God developed through virtues (dharma), spiritual wisdom (gnana) and detachment (vairagya). The Swaminarayan Sampraday is devotion-focused and advocates God within the disciplines of virtues. Swaminarayan propagated a philosophy called Vishistadvaita, which says that God is supreme, has a divine form, is the all-doer and is completely independent. He simply stated that souls (jiva) never merge or dissolve into God and neither are they part of God, but are always subservient to God. Redemption consists in the realisation of ekantik dharma, comprising righteousness, right knowledge, detachment and devotion to that God.

The Swaminarayan Sampraday aims to consolidate characters in society, families and individuals by mass motivation and individual attention, through elevating projects for all, irrespective of class, creed, color and country. The organization believes that the hallmark of the Swaminarayan devotee is that he or she devoutly begins the day with pooja and meditation, works or studies honestly, and donates regular hours in serving others. Swaminarayan's lifetime objective for the organisation was to establish a permanent system of achieving the ultimate redemption from the cycle of life and death (aatyantik kalyaan).

Swaminarayan enthroned his two adopted sons, Acharya Maharajshree Ayodhyaprasad Pande and Acharya Maharajshree Raghuvir Pande, who were the sons of his brothers Rampratapji and Ichcharamji, as the spiritual leaders of the Nar Narayan Dev Gadi headquartered at Ahmedabad and the Laxmi Narayan Dev Gadi headquartered at Vadtal respectively. He installed them as the Acharyas for all followers, including householders and ascetics. Swaminarayan gave sole authority to these two individuals to install murtis in temples and to initiate sadhus and householders into the Sampraday. He did this using a legal document known as "Desh Vibhag no Lekh", which he dictated and was written by Shukanand Swami. Learned saints and elder satsangis witnessed this document. The Acharyas of the Sampraday are administrative heads, spiritual leaders and the gurus of their followers. Since the acharyas are supposed to refrain from contact with the opposite sex, except close relations, the acharyas' wives are the gurus for female members of the sect, and must avoid contact with unfamiliar men.