The paper examines causes and circumstances of the establishment of a Buddhist theocratic state by Lubsan-Samdan Tsydenov, an outstanding figure of Buryat Buddhism. Drawing upon some hitherto unedited Tibetan, Mongolian and Russian sources, the paper undertakes a detailed reconstruction of the events in Siberian Transbaikalia in the period of the Russian Civil War. An analysis of the personal notes by Tsydenov and the text of the Constitution of Kudun Buddhist state shows that “Kudun theocracy” was a syncretic fusion of the traditional Buddhist understanding of the Buddhist “Dharmic state” and modernist conceptions of republicanism and constitutional democracy. The Kudun theocracy should also be interpreted as a response of the Buddhist circles to the attempts of the Buryat secular nationalists to build the Buryat statehood based upon the idea of national self-determination. The Kudun project shows that Buddhism could serve as a foundation for state-building at the age of the early 20th century Russian political crisis.