Ghost Festival is celebrated on the 15th day of the seventh lunar month, also called "Chung Yuan" in Taoist terminology. In the lunar calendar, "Chung Yuan" falls between "Shang Yuan" on the 15th of the first month, known as the day the Ruler of Heaven bestows fortune, and "Hsia Yuan" on the 15th day of the tenth month when the Ruler of Water alleviates suffering. "Chung Yuan" is believed to be the day the Ruler of Earth pardons the sins of men. For this reason, generous sacrifices are prepared for the Ruler of Earth and ancestors during the Ghost Festival.

      The Chinese people refer to the seventh lunar month as "Ghost Month": the first day of which is called the "Opening of the Gates of Hades," since it is believed that the gates of Hell are flung open on this day to allow the ghosts and spirits of the nether world into the world of the living for a month of bacchanal of food and wine. This earthly party comes to an end on the 30th day of the month, called the "Closing of the Gates of Hades." Prodigious tables of wine and meat are offered to one's ancestors and ghosts from the underworld during the Ghost Festival. In Taiwan, ghosts without descendants to care for them are euphemistically called "Good Brethren." Ghost Festival is thus often referred to as "Praying to the Good Brethren." Numerous "Putu" activities are held at this time around the island, crowned by the grand "Keelung Ghost Day Ceremony."

      This day is also known as "Ullambana" in Buddhism, which is a transliteration of the Sanskrit word meaning "deliverance from suffering," and specifically refers to the salvation of anguished souls in Hell. This concept originates from the story of "Moginlin Saving His Mother from Hades." In this Buddhist legend, the protagonist Moginlin learns that his mother's ghost is being tortured in Hades by starvation, and thus embarks on a grueling journey to the underworld bringing food to ease her hunger. However, when Moginlin offers the food to her, it erupts into flames before she is able to swallow. Despairing, he begs Sakymuni to show him a way to bring salvation to his mother, and is answered by the Buddha to find ten monks and pray together on the 15th day of the seventh month. Thus, Moginlin begins a Buddhist ritual and chants the sutras until finally he succeeds in releasing his mother's soul. This legend has been passed down and is today celebrated on "Chung Yuan" by Buddhists, holding ceremonies of charity so that the outcast and famished ghosts may cross over to salvation.

      The Buddhist Ullambana Festival and the Taoist Ghost Festival have melded over time to become the present Chung Yuan "Putu" or "Passage to Universal Salvation."