This paper explores the origin and role of the Buddhist taxonomic category “zong 宗” (“sect” or “school”) in the formation of modern Buddhism in China. It does so by examining a highly significant late-Qing Buddhist text titled Ba-zong-er-xing 八宗二行 (Eight Schools and Two Practices), which the author discovered recently in Japan. Authored by the 19th-century Manchu bannerman official Hešeri Rushan 赫舍裏如山, Eight Schools and Two Practices had a direct influence on the prominent Chinese lay Buddhist Yang Wenhui (1837–1911)’s Shi-zong-lue-shuo 十宗略说 (Brief Outline of the Ten Schools) (1913), which subsequently became the most important narrative model, known as the ten-school model, for describing Chinese Buddhist history in modern times. Historians have long recognized that Yang Wenhui’s Brief Outline of the Ten Schools (1913) was influenced by the medieval Japanese text hasshū kōyō 八宗綱要 (Essentials of the Eight Schools) composed by the 13th-century Japanese monk Gyōnen. Identifying, in detail, Hešeri Rushan’s influence on Yang Wenhui sheds light on how a narrative model for Buddhism in its national form grew out of trans-national intellectual sharing and interactions, and how Chinese Buddhism emerged from the interactive and mutually enabling Sino-Japanese discursive field of the 19th century. Gyōnen, Rushan, and Yang Wenhui all used the category zong, referring to both doctrine and school/sect, to organize narratives of Buddhist history. Their uses were, however, different. Gyōnen’s conception of zong (shū in Japanese) was fixed and exclusive, whereas zong for Rushan and Yang meant more of a mobile, nonexclusive identity. Without knowledge of Japanese Buddhism, Rushan made creative use of zong for describing the history and current condition of Chinese Buddhism, thereby superseding the traditional framework of lineage, doctrine, and precept, or zong 宗, jiao 教, lu 律. Rushan’s zong provided the necessary prerequisite knowledge for Yang Wenhui to understand Gyōnen’s theories, which he studied for constructing his own historical narrative and vision for modern Buddhism.