Dudjom Rinpoche was born in southern Tibet in a region called Pemakö (now Mêdog County), which is known in Tibetan as a beyul (Wylie: sbas yul) or "hidden land".

The second Dudjom Rinpoche was known as Jigdral Yeshe Dorje; Jigdral (Wylie: 'jigs bral) "fearless" was the name given to him by Khakyab Dorje, the fifteenth Karmapa. He was named Jñāna as a child, a Sanskrit term of which "Yeshe" (Wylie: ye shes) is the usual Tibetan translation. His father was Kathok Tulku Norbu Tenzing, who was a famous tulku in the Pema Kö region who had been trained in the Katok Monastery. His mother was Namgyal Drolma, descended from Ratna Lingpa. Dudjom Rinpoche was also a descendant of Nyatri Zangpo and Powo Kanam Depa, king of Powo.

Followers believe that it was written in tantras and old prophesies that during the eon of the Buddha Pranidhanaraja, Dudjom Rinpoche was the yogin Nuden Dorje Chang, who vowed to appear as the thousandth and last Buddha of this Light eon as Sugata Mopa (Od) Thaye. According to the biography of Dudjom Rinpoche on the web site of Wogmin Thubten Shedrup Ling, a Drikung Kagyü monastery, in his previous lives amongst many notable historic figures he was Śāriputra, one of the foremost disciples of Gautama Buddha in India; Saraha, the first and greatest of the eighty-four mahāsiddhas of India; and Humkara, who was also a mahāsiddha.^[1]

The Nyingmapa incorporate many diverse lineages and practices, often varying from one geographical locale to another—though they all trace their lineage sources to Padmasambhava—and as a result, they had not historically appointed a head of their lineage. The new position of lineage head of the Nyingmapa was requested by the Central Tibetan Administration for representational purposes in that body, and the Nyingma leaders asked Dudjom Rinpoche to fulfill that role on behalf of the Nyingma school.

Dudjom Rinpoche was known for preserving many of the historic terma teachings and practice lineages that were at risk of being destroyed. He is described by followers as having been an exceptional scholar in various fields, including sūtra, tantra, prose literature, poetry, and history. He wrote a history of the teachings of the Nyingma lineages, encompassing twenty-five volumes, with the intent of creating an authoritative account,^[2] as well as other teachings, poetry, and terma teachings. He presented a new framing of the philosophical schools used within Buddhist debates. He also helped transfer many texts out of Tibet, preserving them from destruction after the invasion of Tibet and the Cultural Revolution. He organized the building of monasteries, and teaching and retreat centers, in India, Nepal, Bhutan, and other countries.

The system of teachings of the Nyingmapa is categorized as Dzogchen, or "Great Perfection". The fourteenth Dalai Lama, like some of the previous Dalai Lamas, is also a holder of Dzogchen teachings; both of the Dalai Lama's teachers in the Dzogchen tradition—Dilgo Khyentse and Trulshik Rinpoche—were disciples of the second Dudjom Rinpoche.

In 1988, a year after his death, Dudjom Rinpoche's physical body was moved from France and placed in a stūpa in one of his main monasteries near Boudhanath, Nepal. Pilgrims may view his body through a glass window in the stūpa. In a letter, Dudjom Rinpoche appointed the Dzogchen master Chatral Sangye Dorje (1913–2015) as his Vajra Regent.