The 7th and first half of the 8th century are generally considered to be the era in which the Tang reached the zenith of its power. In this period, Tang control extended further west than any previous dynasty, stretching from north Vietnam in the south, to a point north of Kashmir bordering Persia in the west, to northern Korea in the north-east.

Some of the kingdoms paying tribute to the Tang dynasty included Kashmir, Nepal, Khotan, Kucha, Kashgar, Silla, Champa, and kingdoms located in Amu Darya and Syr Darya valley. Turkic nomads addressed the Emperor of Tang China as Tian Kehan. After the widespread Göktürk revolt of Shabolüe Khan (d. 658) was put down at Issyk Kul in 657 by Su Dingfang (591-667), Emperor Gaozong established several protectorates governed by a Protectorate General or Grand Protectorate General, which extended the Chinese sphere of influence as far as Herat in Western Afghanistan. Protectorate Generals were given a great deal of autonomy to handle local crises without waiting for central admission. After Xuanzong's reign, military governors (jiedushi) were given enormous power, including the ability to maintain their own armies, collect taxes, and pass their titles on hereditarily. This is commonly recognized as the beginning of the fall of Tang's central government.

By the year 737, Emperor Xuanzong discarded the policy of conscripting soldiers that were replaced every three years, replacing them with long-service soldiers who were more battle-hardened and efficient. It was more economically feasible as well, since training new recruits and sending them out to the frontier every three years drained the treasury. By the late 7th century, the fubing troops began abandoning military service and the homes provided to them in the equal-field system. The supposed standard of 100 mu of land allotted to each family was in fact decreasing in size in places where population expanded and the wealthy bought up most of the land. Hard-pressed peasants and vagrants were then induced into military service with benefits of exemption from both taxation and corvée labor service, as well as provisions for farmland and dwellings for dependents who accompanied soldiers on the frontier. By the year 742 the total number of enlisted troops in the Tang armies had risen to about 500,000 men.

The Sui and Tang carried out very successful military campaigns against the steppe nomads. Chinese foreign policy to the north and west now had to deal with Turkic nomads, who were becoming the most dominant ethnic group in Central Asia. To handle and avoid any threats posed by the Turks, the Sui government repaired fortifications and received their trade and tribute missions. They sent four royal princesses to form marriage alliances with Turkic clan leaders, in 597, 599, 614, and 617. The Sui stirred trouble and conflict amongst ethnic groups against the Turks. As early as the Sui dynasty, the Turks had become a major militarized force employed by the Chinese. When the Khitans began raiding northeast China in 605, a Chinese general led 20,000 Turks against them, distributing Khitan livestock and women to the Turks as a reward. On two occasions between 635 and 636, Tang royal princesses were married to Turk mercenaries or generals in Chinese service. Throughout the Tang dynasty until the end of 755, there were approximately ten Turkic generals serving under the Tang. While most of the Tang army was made of fubing Chinese conscripts, the majority of the troops led by Turkic generals were of non-Chinese origin, campaigning largely in the western frontier where the presence of fubing troops was low. Some "Turkic" troops were nomadicised Han Chinese, a desinicized people.

Civil war in China was almost totally diminished by 626, along with the defeat in 628 of the Ordos Chinese warlord Liang Shidu; after these internal conflicts, the Tang began an offensive against the Turks. In the year 630, Tang armies captured areas of the Ordos Desert, modern-day Inner Mongolia province, and southern Mongolia from the Turks. After this military victory, Emperor Taizong won the title of Great Khan amongst the various Turks in the region who pledged their allegiance to him and the Chinese empire (with several thousand Turks traveling into China to live at Chang'an). On June 11, 631, Emperor Taizong also sent envoys to the Xueyantuo bearing gold and silk in order to persuade the release of enslaved Chinese prisoners who were captured during the transition from Sui to Tang from the northern frontier; this embassy succeeded in freeing 80,000 Chinese men and women who were then returned to China.

While the Turks were settled in the Ordos region (former territory of the Xiongnu), the Tang government took on the military policy of dominating the central steppe. Like the earlier Han dynasty, the Tang dynasty (along with Turkic allies) conquered and subdued Central Asia during the 640s and 650s. During Emperor Taizong's reign alone, large campaigns were launched against not only the Göktürks, but also separate campaigns against the Tuyuhun, the oasis city-states, and the Xueyantuo. Under Emperor Gaozong, a campaign led by the general Su Dingfang was launched against the Western Turks ruled by Ashina Helu.

The Tang Empire competed with the Tibetan Empire for control of areas in Inner and Central Asia, which was at times settled with marriage alliances such as the marrying of Princess Wencheng (d. 680) to Songtsän Gampo (d. 649). A Tibetan tradition mentions that Chinese troops captured Lhasa after Songtsän Gampo's death, but no such invasion is mentioned in either Chinese annals or the Tibetan manuscripts of Dunhuang.

There was a long string of conflicts with Tibet over territories in the Tarim Basin between 670-692, and in 763 the Tibetans even captured the capital of China, Chang'an, for fifteen days during the An Shi Rebellion. In fact, it was during this rebellion that the Tang withdrew its western garrisons stationed in what is now Gansu and Qinghai, which the Tibetans then occupied along with the territory of what is now Xinjiang. Hostilities between the Tang and Tibet continued until they signed a formal peace treaty in 821. The terms of this treaty, including the fixed borders between the two countries, are recorded in a bilingual inscription on a stone pillar outside the Jokhang temple in Lhasa.

During the Islamic conquest of Persia (633–656), the son of the last ruler of the Sassanid Empire, Prince Pirooz, fled to Tang China. According to the Old Book of Tang, Pirooz was made the head of a Governorate of Persia in what is now Zaranj, Afghanistan. During this conquest of Persia, the Rashidun Islamic Caliph Uthman Ibn Affan (r. 644–656) sent an embassy to the Tang court at Chang'an. Arab sources claim Umayyad commander Qutayba ibn Muslim briefly took Kashgar from China and withdrew after an agreement, but modern historians entirely dismiss this claim. The Arab Umayyad Caliphate in 715 desposed Ikhshid, the king the Fergana Valley, and installed a new king Alutar on the throne. The deposed king fled to Kucha (seat of Anxi Protectorate), and sought Chinese intervention. The Chinese sent 10,000 troops under Zhang Xiaosong to Ferghana. He defeated Alutar and the Arab occupation force at Namangan and reinstalled Ikhshid on the throne. The Tang dynasty Chinese defeated the Arab Umayyad invaders at the Battle of Aksu (717). The Arab Umayyad commander Al-Yashkuri and his army fled to Tashkent after they were defeated. The Turgesh then crushed the Arab Umayyads and drove them out. By the 740s, the Arabs under the Abbasid Caliphate in Khurasan had re-established a presence in the Ferghana basin and in Sogdiana. At the Battle of Talas in 751, Qarluq mercenaries under the Chinese defected, helping the Arab armies of the Islamic Caliphate to defeat the Tang force under commander Gao Xianzhi. Although the battle itself was not of the greatest significance militarily, this was a pivotal moment in history; it marks the spread of Chinese papermaking into regions west of China as captured Chinese soldiers revealed secrets of Chinese papermaking to the Arabs. These techniques ultimately reached Europe by the 12th century through Arab-controlled Spain. Although they had fought at Talas, on June 11, 758, an Abbasid embassy arrived at Chang'an simultaneously with the Uyghur Turks bearing gifts for the Tang Emperor. In 788–9 the Chinese concluded a military alliance with the Uighur Turks who twice defeated the Tibetans, in 789 near the town of Gaochang in Dzungaria, and in 791 near Ningxia on the Yellow River.

Joseph Needham writes that a tributary embassy came to the court of Emperor Taizong in 643 from the Patriarch of Antioch. However, Friedrich Hirth and other sinologists such as S.A.M. Adshead have identified Fu lin (拂菻) in the Old and New Book of Tang as the Byzantine Empire, which those histories directly associated with Daqin (i.e. the Roman Empire). The embassy sent in 643 by Boduoli (波多力) was identified as Byzantine ruler Constans II Pogonatos (Kōnstantinos Pogonatos, or "Constantine the Bearded") and further embassies were recorded as being sent into the 8th century. S.A.M. Adshead offers a different transliteration stemming from "patriarch" or "patrician", possibly a reference to one of the acting regents for the young Byzantine monarch. The Old and New Book of Tang also provide a description of the Byzantine capital Constantinople, including how it was besieged by the Da shi (大食, i.e. Umayyad Caliphate) forces of Muawiyah I, who forced them to pay tribute to the Arabs. The 7th-century Byzantine historian Theophylact Simocatta wrote about the reunification of northern and southern China by the Sui dynasty (dating this to the time of Emperor Maurice); the capital city Khubdan (from Old Turkic Khumdan, i.e. Chang'an); the basic geography of China including its previous political division around the Yangzi River; the name of China's ruler Taisson meaning "Son of God", but possibly derived from the name of the contemporaneous ruler Emperor Taizong.

Both the Sui and Tang Dynasties had turned away from the more feudal culture of the preceding Northern Dynasties, in favor of staunch civil Confucianism. The governmental system was supported by a large class of Confucian intellectuals selected through either civil service examinations or recommendations. In the Tang period, Daoism and Buddhism reigned as core ideologies as well, and played a large role in people's daily lives. The Tang Chinese enjoyed feasting, drinking, holidays, sports, and all sorts of entertainment, while Chinese literature blossomed and was more widely accessible with new printing methods.

The Tang period was a golden age of Chinese literature and art. Over 48,900 poems penned by some 2,200 Tang authors have survived to the present day. Skill in the composition of poetry became a required study for those wishing to pass imperial examinations, while poetry was also heavily competitive; poetry contests amongst guests at banquets and courtiers were common. Poetry styles that were popular in the Tang included gushi and jintishi, with the renowned poet Li Bai (701-762) famous for the former style, and poets like Wang Wei (701-761) and Cui Hao (704-754) famous for their use of the latter. Jintishi poetry, or regulated verse, is in the form of eight-line stanzas or seven characters per line with a fixed pattern of tones that required the second and third couplets to be antithetical (although the antithesis is often lost in translation to other languages). Tang poems remained popular and great emulation of Tang era poetry began in the Song dynasty; in that period, Yan Yu (嚴羽; active 1194–1245) was the first to confer the poetry of the High Tang (c. 713-766) era with "canonical status within the classical poetic tradition." Yan Yu reserved the position of highest esteem among all Tang poets for Du Fu (712-770), who was not viewed as such in his own era, and was branded by his peers as an anti-traditional rebel.

The Classical Prose Movement was spurred in large part by the writings of Tang authors Liu Zongyuan (773-819) and Han Yu (768-824). This new prose style broke away from the poetry tradition of the piantiwen (騙體文, "parallel prose") style begun in the Han dynasty. Although writers of the Classical Prose Movement imitated piantiwen, they criticized it for its often vague content and lack of colloquial language, focusing more on clarity and precision to make their writing more direct. This guwen (archaic prose) style can be traced back to Han Yu, and would become largely associated with orthodox Neo-Confucianism.

Short story fiction and tales were also popular during the Tang, one of the more famous ones being Yingying's Biography by Yuan Zhen (779-831), which was widely circulated in his own time and by the Yuan dynasty (1279-1368) became the basis for plays in Chinese opera. Timothy C. Wong places this story within the wider context of Tang love tales, which often share the plot designs of quick passion, inescapable societal pressure leading to the abandonment of romance, followed by a period of melancholy. Wong states that this scheme lacks the undying vows and total self-commitment to love found in Western romances such as Romeo and Juliet, but that underlying traditional Chinese values of inseparableness of self from one's environment (including human society) served to create the necessary fictional device of romantic tension.

There were large encyclopedias published in the Tang. The Yiwen Leiju encyclopedia was compiled in 624 by the chief editor Ouyang Xun (557-641) as well as Linghu Defen (582-666) and Chen Shuda (d. 635). The encyclopedia Treatise on Astrology of the Kaiyuan Era was fully compiled in 729 by Gautama Siddha (fl. 8th century), an ethnic Indian astronomer, astrologer, and scholar born in the capital Chang'an.

Chinese geographers such as Jia Dan wrote accurate descriptions of places far abroad. In his work written between 785 and 805, he described the sea route going into the mouth of the Persian Gulf, and that the medieval Iranians (whom he called the people of Luo-He-Yi) had erected 'ornamental pillars' in the sea that acted as lighthouse beacons for ships that might go astray. Confirming Jia's reports about lighthouses in the Persian Gulf, Arabic writers a century after Jia wrote of the same structures, writers such as al-Mas'udi and al-Muqaddasi. The Tang dynasty Chinese diplomat Wang Xuance traveled to Magadha (modern northeastern India) during the 7th century. Afterwards he wrote the book Zhang Tianzhu Guotu (Illustrated Accounts of Central India), which included a wealth of geographical information.

Many histories of previous dynasties were compiled between 636 and 659 by court officials during and shortly after the reign of Emperor Taizong of Tang. These included the Book of Liang, Book of Chen, Book of Northern Qi, Book of Zhou, Book of Sui, Book of Jin, History of Northern Dynasties and the History of Southern Dynasties. Although not included in the official Twenty-Four Histories, the Tongdian and Tang Huiyao were nonetheless valuable written historical works of the Tang period. The Shitong written by Liu Zhiji in 710 was a meta-history, as it covered the history of Chinese historiography in past centuries until his time. The Great Tang Records on the Western Regions, compiled by Bianji, recounted the journey of Xuanzang, the Tang era's most renowned Buddhist monk.

Other important literary offerings included Duan Chengshi's (d. 863) Miscellaneous Morsels from Youyang, an entertaining collection of foreign legends and hearsay, reports on natural phenomena, short anecdotes, mythical and mundane tales, as well as notes on various subjects. The exact literary category or classification that Duan's large informal narrative would fit into is still debated amongst scholars and historians.

Since ancient times, the Chinese believed in a folk religion and Daoism that incorporated many deities. The Chinese believed Tao and the afterlife was a reality parallel to the living world, complete with its own bureaucracy and afterlife currency needed by dead ancestors. Funerary practices included providing the deceased with everything they might need in the afterlife, including animals, servants, entertainers, hunters, homes, and officials. This ideal is reflected in Tang dynasty art. This is also reflected in many short stories written in the Tang about people accidentally winding up in the realm of the dead, only to come back and report their experiences.

Buddhism, originating in India around the time of Confucius, continued its influence during the Tang period and was accepted by some members of imperial family, becoming thoroughly sinicized and a permanent part of Chinese traditional culture. In an age before Neo-Confucianism and figures such as Zhu Xi (1130-1200), Buddhism had begun to flourish in China during the Northern and Southern dynasties, and became the dominant ideology during the prosperous Tang. Buddhist monasteries played an integral role in Chinese society, offering lodging for travelers in remote areas, schools for children throughout the country, and a place for urban literati to stage social events and gatherings such as going-away parties. Buddhist monasteries were also engaged in the economy, since their land property and serfs gave them enough revenues to set up mills, oil presses, and other enterprises. Although the monasteries retained 'serfs', these monastery dependents could actually own property and employ others to help them in their work, including their own slaves.

The prominent status of Buddhism in Chinese culture began to decline as the dynasty and central government declined as well during the late 8th century to 9th century. Buddhist convents and temples that were exempt from state taxes beforehand were targeted by the state for taxation. In 845 Emperor Wuzong of Tang finally shut down 4,600 Buddhist monasteries along with 40,000 temples and shrines, forcing 260,000 Buddhist monks and nuns to return to secular life; this episode would later be dubbed one of the Four Buddhist Persecutions in China. Although the ban would be lifted just a few years after, Buddhism never regained its once dominant status in Chinese culture. This situation also came about through new revival of interest in native Chinese philosophies, such as Confucianism and Daoism. Han Yu (786-824) — who Arthur F. Wright stated was a "brilliant polemicist and ardent xenophobe" — was one of the first men of the Tang to denounce Buddhism. Although his contemporaries found him crude and obnoxious, he would foreshadow the later persecution of Buddhism in the Tang, as well as the revival of Confucian theory with the rise of Neo-Confucianism of the Song dynasty. Nonetheless, Chán Buddhism gained popularity amongst the educated elite. There were also many famous Chan monks from the Tang era, such as Mazu Daoyi, Baizhang, and Huangbo Xiyun. The sect of Pure Land Buddhism initiated by the Chinese monk Huiyuan (334-416) was also just as popular as Chan Buddhism during the Tang.

Rivaling Buddhism was Daoism, a native Chinese philosophical and religious belief system that found its roots in the book of the Daodejing (attributed to a 6th-century BC figure named Laozi) and the Zhuangzi. The ruling Li family of the Tang dynasty actually claimed descent from the ancient Laozi. On numerous occasions where Tang princes would become crown prince or Tang princesses taking vows as Daoist priestesses, their lavish former mansions would be converted into Daoist abbeys and places of worship. Many Daoists were associated with alchemy in their pursuits to find an elixir of immortality and a means to create gold from concocted mixtures of many other elements. Although they never achieved their goals in either of these futile pursuits, they did contribute to the discovery of new metal alloys, porcelain products, and new dyes. The historian Joseph Needham labeled the work of the Daoist alchemists as "proto-science rather than pseudo-science." However, the close connection between Daoism and alchemy, which some sinologists have asserted, is refuted by Nathan Sivin, who states that alchemy was just as prominent (if not more so) in the secular sphere and practiced more often by laymen.

The Tang dynasty also officially recognized various foreign religions. The Assyrian Church of the East, otherwise known as the Nestorian Church or the Church of the East in China, was given recognition by the Tang court. In 781, the Nestorian Stele was created in order to honor the achievements of their community in China. A Christian monastery was established in Shaanxi province where the Daqin Pagoda still stands, and inside the pagoda there is Christian-themed artwork. Although the religion largely died out after the Tang, it was revived in China following the Mongol invasions of the 13th century.

Although the Sogdians had been responsible for transmitting Buddhism to China from India during the 2nd to 4th centuries, soon afterwards they largely converted to Zoroastrianism due to their links to Sassanid Persia. Sogdian merchants and their families living in cities such as Chang'an, Luoyang, and Xiangyang usually built a Zoroastrian temple once their local communities grew larger than 100 households. Sogdians were also responsible for spreading Manichaeism in Tang China and the Uyghur Khaganate. The Uyghurs built the first Manichaean monastery in China in 768, yet in 843 the Tang government ordered that the property of all Manichaean monasteries be confiscated in response to the outbreak of war with the Uyghurs. With the blanket ban on foreign religions two years later, Manichaeism was driven underground and never flourished in China again.