Sannyasins who had "graduated" from months of meditation and therapy could apply to work in the ashram, in an environment that was consciously modelled on the community the Russian mystic Gurdjieff led in France in the 1930s. Key features incorporated from Gurdjieff were hard, unpaid work, and supervisors chosen for their abrasive personality, both designed to provoke opportunities for self-observation and transcendence. Many disciples chose to stay for years. Besides the controversy around the therapies, allegations of drug use amongst sannyasin began to mar the ashram's image. Some Western sannyasins were alleged to be financing extended stays in India through prostitution and drug-running. A few later alleged that, while Rajneesh was not directly involved, they discussed such plans and activities with him in darshan and he gave his blessing.

In 1951, aged nineteen, Rajneesh began his studies at Hitkarini College in Jabalpur. Asked to leave after conflicts with an instructor, he transferred to D. N. Jain College, also in Jabalpur. Having proved himself to be disruptively argumentative, he was not required to attend college classes in D. N. Jain College except for examinations and used his free time to work for a few months as an assistant Editor at a local newspaper. He began speaking in public at the annual Sarva Dharma Sammelan (Meeting of all faiths) held at Jabalpur, organised by the Taranpanthi Jain community into which he was born, and participated there from 1951 to 1968. He resisted his parents' pressure to get married. Rajneesh later said he became spiritually enlightened on 21 March 1953, when he was 21 years old, in a mystical experience while sitting under a tree in the Bhanvartal garden in Jabalpur.

Having completed his B.A. in philosophy at D. N. Jain College in 1955, he joined the University of Sagar, where in 1957 he earned his M.A. in philosophy (with distinction). He immediately secured a teaching position at Raipur Sanskrit College, but the Vice-Chancellor soon asked him to seek a transfer as he considered him a danger to his students' morality, character and religion. From 1958, he taught philosophy as a lecturer at Jabalpur University, being promoted to professor in 1960. A popular lecturer, he was acknowledged by his peers as an exceptionally intelligent man who had been able to overcome the deficiencies of his early small-town education.

In a 1968 lecture series, later published under the title From Sex to Superconsciousness, he scandalised Hindu Leaders by calling for freer acceptance of sex and became known as the "sex guru" in the Indian press. When in 1969 he was invited to speak at the Second World Hindu Conference, despite the misgivings of some Hindu Leaders, he used the occasion to raise controversy again, claiming that "any religion which considers life meaningless and full of misery, and teaches the hatred of life, is not a true religion. Religion is an art that shows how to enjoy life." He characterised brahmin as being motivated by self-interest, provoking the shankaracharya of Puri, who tried in vain to have his lecture stopped.

By the latter 1970s, the Poona ashram was too small to contain the rapid growth and Rajneesh asked that somewhere larger be found. Sannyasins from around India started looking for properties: those found included one in the province of Kutch in Gujarat and two more in India's mountainous north. The plans were never implemented as mounting tensions between the ashram and the Janata Party government of Morarji Desai resulted in an impasse. Land-use approval was denied and, more importantly, the government stopped issuing visas to foreign visitors who indicated the ashram as their main destination. In addition, Desai's government cancelled the tax-exempt status of the ashram with retrospective effect, resulting in a claim estimated at $5 million. Conflicts with various Indian religious Leaders aggravated the situation—by 1980 the ashram had become so controversial that Indira Gandhi, despite a previous association between Rajneesh and the Indian Congress Party dating back to the sixties, was unwilling to intercede for it after her return to power. In May 1980, during one of Rajneesh's discourses, an attempt on his life was made by Vilas Tupe, a young Hindu fundamentalist. Tupe claims that he undertook the attack, because he believed Rajneesh to be an agent of the CIA.

A number of commentators have remarked upon Rajneesh's charisma. Comparing Rajneesh with Gurdjieff, Anthony Storr wrote that Rajneesh was "personally extremely impressive", noting that "many of those who visited him for the first time felt that their most intimate feelings were instantly understood, that they were accepted and unequivocally welcomed rather than judged. [Rajneesh] seemed to radiate Energy and to awaken hidden possibilities in those who came into contact with him". Many sannyasins have stated that hearing Rajneesh speak, they "fell in love with him." Susan J. Palmer noted that even critics attested to the power of his presence. James S. Gordon, a Psychiatrist and researcher, recalls inexplicably finding himself laughing like a child, hugging strangers and having tears of gratitude in his eyes after a glance by Rajneesh from within his passing Rolls-Royce. Frances FitzGerald concluded upon listening to Rajneesh in person that he was a brilliant lecturer, and expressed surprise at his talent as a Comedian, which had not been apparent from reading his books, as well as the hypnotic quality of his talks, which had a profound effect on his audience. Hugh Milne (Swami Shivamurti), an ex-devotee who between 1973 and 1982 worked closely with Rajneesh as leader of the Poona Ashram Guard and as his personal bodyguard, noted that their first meeting left him with a sense that far more than words had passed between them: "There is no invasion of privacy, no alarm, but it is as if his soul is slowly slipping inside mine, and in a split second transferring vital information." Milne also observed another facet of Rajneesh's charismatic ability in stating that he was "a brilliant manipulator of the unquestioning disciple".

The humid climate of Mumbai proved detrimental to Rajneesh's health: he developed diabetes, asthma and numerous allergies. In 1974, on the 21st anniversary of his experience in Jabalpur, he moved to a property in Koregaon Park, Pune, purchased with the help of Ma Yoga Mukta (Catherine Venizelos), a Greek shipping heiress. Rajneesh spoke at the Poona ashram from 1974 to 1981. The two adjoining houses and 6 acres (24,000 m) of land became the nucleus of an ashram, and the property is still the heart of the present-day Osho International Meditation Resort. It allowed the regular audio recording and, later, video recording and printing of his discourses for worldwide distribution, enabling him to reach far larger audiences. The number of Western visitors increased sharply. The ashram soon featured an arts-and-crafts centre producing clothes, jewellery, ceramics and organic cosmetics and hosted performances of theatre, music and mime. From 1975, after the arrival of several therapists from the Human Potential Movement, the ashram began to complement meditations with a growing number of therapy groups, which became a major source of income for the ashram.

To decide which therapies to participate in, visitors either consulted Rajneesh or made selections according to their own preferences. Some of the early therapy groups in the ashram, such as the Encounter group, were experimental, allowing a degree of physical aggression as well as sexual encounters between participants. Conflicting reports of injuries sustained in Encounter group sessions began to appear in the press. Richard Price, at the time a prominent Human Potential Movement therapist and co-founder of the Esalen institute, found the groups encouraged participants to 'be violent' rather than 'play at being violent' (the norm in Encounter groups conducted in the United States), and criticised them for "the worst mistakes of some inexperienced Esalen group leaders". Price is alleged to have exited the Poona ashram with a broken arm following a period of eight hours locked in a room with participants armed with wooden weapons. Bernard Gunther, his Esalen colleague, fared better in Poona and wrote a book, Dying for Enlightenment, featuring photographs and lyrical descriptions of the meditations and therapy groups. Violence in the therapy groups eventually ended in January 1979, when the ashram issued a press release stating that violence "had fulfilled its function within the overall context of the ashram as an evolving spiritual commune".

During the early 1980s, a number of commentators in the popular press were dismissive of Rajneesh. The Australian critic Clive James scornfully referred to him as "Bagwash", likening the experience of listening to one of his discourses to sitting in a laundrette and watching "your tattered underwear revolve soggily for hours while exuding grey suds. The Bagwash talks the way that looks." James finished by saying that Rajneesh, though a "fairly benign Example of his type", was a "rebarbative dingbat who manipulates the manipulable into manipulating one another". Responding to an enthusiastic review of Rajneesh's talks by Bernard Levin in The Times, Dominik Wujastyk, also writing in The Times, similarly expressed his opinion that the talk he heard while visiting the Poona ashram was of a very low standard, wearyingly repetitive and often factually wrong, and stated that he felt disturbed by the personality cult surrounding Rajneesh.

In 1981, Rajneesh gave Sheela limited power of attorney and removed the limits the following year. In 1983, Sheela announced that he would henceforth speak only with her. He would later state that she kept him in ignorance. Many sannyasins expressed doubts about whether Sheela properly represented Rajneesh and many dissidents left Rajneeshpuram in protest of its autocratic leadership. Resident sannyasins without US citizenship experienced visa difficulties that some tried to overcome by marriages of convenience. Commune administrators tried to resolve Rajneesh's own difficulty in this respect by declaring him the head of a religion, "Rajneeshism":

In March 1982, local residents formed a group called Citizens for Constitutional Cities to oppose the Ranch development. (Hortsch, Dan 18 Mar 1982 "Fearing 'religious cities' group forms to monitor activities of commune" The Oregonian p. D28.) An initiative petition was filed which would order the governor "'to contain, control and remove' the threat of invasion by an 'alien cult'". In 1985, another state petition, supported by several Oregon legislators, was filed to invalidate the charter of the City of Rajneeshpuram. In July 1985, the venue of a civil trial was moved because studies offered by the Foundation showed bias. The judge stated that "community attitudes would not permit a fair and impartial trial". The Oregon legislature passed several bills seeking to slow or stop the development and the City of Rajneeshpuram, including HB 3080 which stopped distribution of revenue sharing funds "for any city whose legal status had been challenged. Rajneeshpuram was the only city impacted by the legislation." Oregon Gov. Vic Atiyah stated in 1982 that since their neighbours did not like them, they should leave Oregon. A representative of the community responded "all you have to do is insert the word Negro or Jew or Catholic…and it is a little easier to understand how that statement sounded." In May 1982, US Senator Mark Hatfield called the INS in Portland. An INS memo stated that the Senator was "very concerned" about this "religious cult" is "endangering the way of life for a small agricultural town…and is a threat to public safety". Such actions "often do have influence on immigration decisions". Charles Turner, the US Attorney responsible for the prosecution of the immigration case against Rajneesh, said, after Rajneesh left the US his deportation was effective because it "caused the destruction of the entire movement". In January 1989, INS Commissioner Charles Nelson acknowledged that there had been "a lot of interest" in the immigration investigation from both the Oregon Senators, the "White House and the Justice Department". And there were many "opinions, mostly like 'This is a Problem, and we need to do something about it.'" Mr. Turner later acknowledged, "we were using the legal process to solve…a political Problem." James T. Richardson, a Writer of works on issues of legal regulation of religion on new religion reported, as to press coverage generally, that the commune was the "focus of a huge outpouring of media attention, virtually all negative in tone". The Oregonian, by far the dominant newspaper in the state, ran a full page ad in 1987 which stated that the Oregonian "contributed to the demise of the Rajneesh commune in Oregon and the banishment of Bhagwan". An Oregon State University professor of religious studies stated that the "hysteria…erodes freedom, and presents a much more serious threat than Rajneeshism, which he viewed as an emerging religion". Mr. Richardson further found that "this plethora of legal action also shows the immense power of governmental entities to deal effectively with unpopular religious groups." (id. p. 483.) He concludes his study: "Given the record[…,] Oregon new religions have been on trial, and usually they have lost." In 1983 the Oregon Attorney General filed a lawsuit seeking to declare the City void because of an alleged violation of the Establishment Clause of the First Amendment to the Constitution. The Court found that the City property was owned and controlled by the Foundation, and entered judgment for the State. The court disregarded the controlling US constitutional cases requiring that a violation be redressed by the "least intrusive means" necessary to correct the violation, which it had earlier cited. The City was forced to "acquiesce" in the decision, as part of a settlement of Rajneesh's immigration case.

Academic assessments of Rajneesh's work have been mixed and often directly contradictory. Uday Mehta saw errors in his interpretation of Zen and Mahayana Buddhism, speaking of "gross contradictions and inconsistencies in his teachings" that "exploit" the "ignorance and gullibility" of his listeners. The Sociologist Bob Mullan wrote in 1983 of "a borrowing of truths, half-truths and occasional misrepresentations from the great traditions"... often bland, inaccurate, spurious and extremely contradictory". Hugh B. Urban also said Rajneesh's teaching was neither original nor especially profound, and concluded that most of its content had been borrowed from various Eastern and Western philosophies. George Chryssides, on the other hand, found such descriptions of Rajneesh's teaching as a "potpourri" of various religious teachings unfortunate because Rajneesh was "no amateur philosopher". Drawing attention to Rajneesh's academic background he stated that; "Whether or not one accepts his teachings, he was no charlatan when it came to expounding the ideas of others." He described Rajneesh as primarily a Buddhist Teacher, promoting an independent form of "Beat Zen" and viewed the unsystematic, contradictory and outrageous aspects of Rajneesh's teachings as seeking to induce a change in people, not as philosophy lectures aimed at intellectual understanding of the subject.

Several months later, on 30 October 1984, he ended his period of public silence, announcing that it was time to "speak his own truths." In July 1985 he resumed daily public discourses. On 16 September 1985, a few days after Sheela and her entire management team had suddenly left the commune for Europe, Rajneesh held a press conference in which he labelled Sheela and her associates a "gang of fascists". He accused them of having committed a number of serious crimes, most of these dating back to 1984, and invited the authorities to investigate.

Following his exit from the US, Rajneesh returned to India, landing in Delhi on 17 November 1985. He was given a hero's welcome by his Indian disciples and denounced the United States, saying the world must "put the Monster America in its place" and that "Either America must be hushed up or America will be the end of the world." He then stayed for six weeks in Himachal Pradesh. When non-Indians in his party had their visas revoked, he moved on to Kathmandu, Nepal, and then, a few weeks later, to Crete. Arrested after a few days by the Greek National Intelligence Service (KYP), he flew to Geneva, then to Stockholm and to Heathrow, but was in each case refused entry. Next Canada refused landing permission, so his plane returned to Shannon airport, Ireland, to refuel. There he was allowed to stay for two weeks, at a hotel in Limerick, on condition that he did not go out or give talks. He had been granted a Uruguayan identity card, one-year provisional residency and a possibility of permanent residency, so the party set out, stopping at Madrid, where the plane was surrounded by the Guardia Civil. He was allowed to spend one night at Dakar, then continued to Recife and Montevideo. In Uruguay, the group moved to a house at Punta del Este where Rajneesh began speaking publicly until 19 June, after which he was "invited to leave" for no official reason. A two-week visa was arranged for Jamaica but on arrival in Kingston police gave the group 12 hours to leave. Refuelling in Gander and in Madrid, Rajneesh returned to Bombay, India, on 30 July 1986.

In November 1987, Rajneesh expressed his belief that his deteriorating health (nausea, fatigue, pain in extremities and lack of resistance to infection) was due to poisoning by the US authorities while in prison. His doctors and former attorney, Philip J. Toelkes (Swami Prem Niren), hypothesised radiation and thallium in a deliberately irradiated mattress, since his symptoms were concentrated on the right side of his body, but presented no hard evidence. US attorney Charles H. Hunter described this as "complete fiction", while others suggested exposure to HIV or chronic diabetes and stress.

From early 1988, Rajneesh's discourses focused exclusively on Zen. In late December, he said he no longer wished to be referred to as "Bhagwan Shree Rajneesh", and in February 1989 took the name "Osho Rajneesh", shortened to "Osho" in September. He also requested that all trademarks previously branded with "Rajneesh" be rebranded "Osho". His health continued to weaken. He delivered his last public discourse in April 1989, from then on simply sitting in silence with his followers. Shortly before his death, Rajneesh suggested that one or more audience members at evening meetings (now referred to as the White Robe Brotherhood) were subjecting him to some form of evil magic. A search for the perpetrators was undertaken, but none could be found.

Writing in the Seattle Post Intelligencer in January 1990, American author Tom Robbins stated that based on his readings of Rajneesh's books, he was convinced Rajneesh was the 20th century's "greatest spiritual teacher". Robbins, while stressing that he was not a disciple, further stated that he had "read enough vicious propaganda and slanted reports to suspect that he was one of the most maligned figures in history". Rajneesh's commentary on the Sikh scripture known as Japuji was hailed as the best available by Giani Zail Singh, the former President of India. In 2011, author Farrukh Dhondy reported that film star Kabir Bedi was a fan of Rajneesh, and viewed Rajneesh's works as "the most sublime interpretations of Indian philosophy that he had come across". Dhondy himself viewed Rajneesh as "the cleverest intellectual confidence trickster that India has produced. His output of the 'interpretation' of Indian texts is specifically slanted towards a generation of disillusioned westerners who wanted (and perhaps still want) to 'have their cake, eat it' [and] claim at the same time that cake-eating is the highest virtue according to ancient-fused-with-scientific wisdom."

While Rajneesh's teachings were not welcomed in his own home country during his lifetime, there has been a change in Indian public opinion since Rajneesh's death. In 1991, an influential Indian newspaper counted Rajneesh, along with figures such as Gautama Buddha and Mahatma Gandhi, among the ten people who had most changed India's destiny; in Rajneesh's case, by "liberating the minds of Future generations from the shackles of religiosity and conformism". Rajneesh has found more acclaim in his homeland since his death than he ever did while alive. Writing in The Indian Express, columnist Tanweer Alam stated, "The late Rajneesh was a fine interpreter of social absurdities that destroyed human happiness." At a celebration in 2006, marking the 75th anniversary of Rajneesh's birth, Indian singer Wasifuddin Dagar said that Rajneesh's teachings are "more pertinent in the current milieu than they were ever before". In Nepal, there were 60 Rajneesh centres with almost 45,000 initiated disciples as of January 2008. Rajneesh's entire works have been placed in the Library of India's National Parliament in New Delhi. Prominent figures such as Indian Prime Minister Manmohan Singh and the Indian Sikh Writer Khushwant Singh have expressed their admiration for Osho. The Bollywood actor and Rajneesh disciple Vinod Khanna, who had worked as Rajneesh's gardener in Rajneeshpuram, served as India's Minister of State for External Affairs from 2003 to 2004. Over 650 books are credited to Rajneesh, expressing his views on all facets of human existence. Virtually all of them are renderings of his taped discourses. His books are available in more than 60 languages and have entered best-seller lists in countries such as Italy and South Korea.

Rajneesh continues to be known and published worldwide in the area of meditation and his work also includes social and political commentary. Transcriptions of his discourses are published in more than 60 languages and are available from more than 200 different publishing houses. Internationally, after almost two decades of controversy and a decade of accommodation, Rajneesh's movement has established itself in the market of new religions. His followers have redefined his contributions, reframing central elements of his teaching so as to make them appear less controversial to outsiders. Societies in North America and Western Europe have met them half-way, becoming more accommodating to spiritual topics such as yoga and meditation. The Osho International Foundation (OIF) runs stress management seminars for corporate clients such as IBM and BMW, with a reported (2000) revenue between $15 and $45 million annually in the US

In 2005, Urban observed that Rajneesh had undergone a "remarkable apotheosis" after his return to India, and especially in the years since his death, going on to describe him as a powerful illustration of what F. Max Müller, over a century ago, called "that world-wide circle through which, like an electric current, Oriental thought could run to the West and Western thought return to the East". Clarke also noted that Rajneesh has come to be "seen as an important Teacher within India itself" who is "increasingly recognised as a major spiritual Teacher of the twentieth century, at the forefront of the current 'world-accepting' trend of spirituality based on self-development".

Rajneesh's ashram in Pune has become the Osho International Meditation Resort, one of India's main tourist attractions. Describing itself as the Esalen of the East, it teaches a variety of spiritual techniques from a broad range of traditions and promotes itself as a spiritual oasis, a "sacred space" for discovering one's self and uniting the desires of body and mind in a beautiful resort environment. According to press reports, it attracts some 200,000 people from all over the world each year; prominent visitors have included politicians and media personalities. Before anyone is allowed to enter the resort, an HIV test is required, and those who are discovered to have the disease are not allowed in. In 2011, a national seminar on Rajneesh's teachings was inaugurated at the Department of Philosophy of the Mankunwarbai College for Women in Jabalpur. Funded by the Bhopal office of the University Grants Commission, the seminar focused on Rajneesh's "Zorba the Buddha" teaching, seeking to reconcile spirituality with the materialist and objective approach.

He stated that the decision to have a child should be a medical matter, and that oversight of population and genetics must be kept in the realm of science, outside of politicians' control: "If genetics is in the hands of Joseph Stalin, Adolf Hitler, Benito Mussolini, what will be the fate of the world?" He believed that in the right hands, these measures could be used for good: "Once we know how to change the program, thousands of possibilities open up. We can give every man and woman the best of everything. There is no need for anyone to suffer unnecessarily. Being retarded, crippled, blind, ugly – all these will be possible to change."

In parallel to his university job, he travelled throughout India under the name Acharya Rajneesh (Acharya means Teacher or professor; Rajneesh was a nickname he had acquired in childhood), giving lectures critical of socialism, Gandhi and institutional religions. He said that socialism would socialise only poverty, and he described Gandhi as a masochist reactionary who worshipped poverty. What India needed to escape its backwardness was capitalism, science, modern Technology and birth control. He criticised orthodox Indian religions as dead, filled with empty ritual, oppressing their followers with fears of damnation and the promise of blessings. Such statements made him controversial, but also gained him a loyal following that included a number of wealthy merchants and businessmen. These sought individual consultations from him about their spiritual development and daily life, in return for donations—a commonplace arrangement in India—and his practice grew rapidly. From 1962, he began to lead 3- to 10-day meditation camps, and the first meditation centres (Jivan Jagruti Kendra) started to emerge around his teaching, then known as the Life Awakening Movement (Jivan Jagruti Andolan). After a controversial speaking tour in 1966, he resigned from his teaching post at the request of the university.