In China as elsewhere, alchemy is a doctrine aiming to afford an understanding of the principles underlying the formation and functioning of the cosmos. The alchemist rises through the hierarchy of the constituents of being by "exhausting" (Chin. jin or liao, two words also denoting "thorough knowledge") the nature and properties of each stage. He overcomes the limits of individuality, and ascends to higher states of being; he becomes, in Chinese terms, a zhenren or Authentic Man.

While historical and literary sources (including poetry) provide many important details, the bulk of the Chinese alchemical sources is found in the Daozang (Taoist Canon), the largest collection of Taoist texts. One fifth of its about 1,500 texts are closely related to the various alchemical traditions that developed until the fifteenth century, when the extant Canon was compiled and printed. Later texts are included in the Daozang jiyao (Essentials of the Taoist Canon) and in minor collections. Modern study of the alchemical literature began in the present century, after the Canon was reprinted and made widely available in 1926. Among the most important contributions in Western languages are those of Joseph Needham, Nathan Sivin, Ho Peng Yoke, Farzeen Baldrian-Hussein, and Isabelle Robinet.

Though the underlying doctrines remained unchanged, Chinese alchemy went through a complex and not yet entirely understood development along its twenty centuries of documented history. The two main traditions are conventionally known as waidan or "external alchemy" and neidan or "internal alchemy." The former, which arose earlier, is based on the compounding of elixirs through the manipulation of natural substances. Its texts consist of recipes, along with descriptions of ingredients, ritual rules, and passages concerned with the cosmological associations of minerals and metals, instruments, and operations. Internal alchemy developed as an independent discipline around the beginning of the Tang period. It borrows a substantial part of its vocabulary from its earlier counterpart, but aims to produce an elixir -- equated with transcendental knowledge -- within the alchemist's person.

Chinese alchemy has always been closely related to the teachings that find their classical expression in the early "philosophical" texts of Taoism, especially the Laozi and the Zhuangzi. The cosmos as we know it is conceived of as the final stage in a series of spontaneous transmutations stemming from original non-existence. This process entails the apparent separation of primeval Unity into the two complementary principles, yin and yang. Their re-union generates the cosmos. When the process is completed, the cosmos is subject to the laws of cosmology. The alchemist's task is to retrace this process backwards. Alchemy, whether "external" or "internal," provides support to the adept, leading one to the point when, as some texts put it, "Heaven spontaneously reveals its secrets." Its practice must be performed under the close supervision of a master, who provides the "oral instructions" (口诀) necessary to an understanding of the processes that the adept performs with minerals and metals, or undergoes within himself.