This research reports on findings from an ethnographic study on the Kha Phra Kaeo ethnicity to uncover its formation and to analyze its dynamics and cultural negotiations in the context of Thai-Lao history and politics. The ethnonym Kha Phra Kaeo designates an ethnic group descended from the Bru, with a consistent cultural structure, language and belief system. They were first perceived as an ethnic group due to events connected to the possession of a contested Buddha image called Phra Kaeo Phaluek Mok. They are seen as more distinctly Kha Phra Kaeo than the Bru, to whom they were related. Due to state power and political changes in Laos, The Kha Phra Kaeo underwent cultural assimilation and formed a distinct cultural group based on their legends and ritual reproductions, which are related to the Buddha image, to emphasize the group’s historical significance and to negotiate a higher place for the group within the Lao social hierarchy. The Kha Phra Kaeo people have the ability to adapt to changes while constructing a distinct ethnic and cultural identity.