Reiki is claimed to have been "rediscovered" by a Japanese man named Mikao Usui, a Tendai Buddhist. After long meditation, fasting and prayer, Usui claimed to have gained the knowledge and spiritual power to apply and attune others to "Reiki" healing energy through a mystical revelation. While some believers in Reiki claim that access to this energy is fairly limited for the majority of people, they claim that Reiki is available to everyone. Some go so far as to hold that the energy system Reiki flows through and works with is integrated into our basic energy body (or aura) and that every person has the ability to channel this energy. Mikao Usui claimed that he could enable his students to enlarge their access to the energy through certain initiations. Attunement to the energy is said to enhance and refine the ability to connect with this already-occurring natural process. Through such initiations, students become clearer channels for Reiki energy, and this, in turn, enhances the quality of treatments that student (or practitioner) provides to the patient.

It is said that while Mikao Usui was actively pursuing the art of healing before he developed his Reiki method he studied Chinese medicine, Ayurveda, Qigong and Yoga. He claimed that the awakening of Reiki and the development of the set of accompanying techniques was something entirely different, however. Nonethless, Reiki seems to be based loosely around Taoist ideas of qi. The "ki" in "Reiki" is the Japanese pronunciation of the Chinese character.

Hawayo Takata claimed that, after developing the Reiki methodology, as well as receiving the spiritual ability to practice it, Usui went to the slums of Tokyo to attempt the healing of beggars. However, after several years, he claimed that it was their mindset that kept them ill, even after he had "treated" them again and again. This gave rise to the principle that there should be an "energy exchange" in return for a Reiki treatment. This "energy exchange" may take the form of cash payment, or a trade of some sort. The idea is that the patient regards the treatment as having a value and is prepared to invest himself/herself in the healing process.

Usui was also a great admirer of the literary works of Emperor Meiji, and, in the process of developing his Reiki system, summarised some of the Meiji Emperor's works into five ethical principles, one rendering of which is:

"Just for today, do not worry.
Just for today, do not anger.
Honor your parents, teachers, and elders.
Earn your living honestly.
Show gratitude to everything."
Mikao Usui trained several disciples. One of his disciples, the naval doctor Chujiro Hayashi, stressed physical healing and taught a more codified and simpler set of Reiki techniques. Among Hayashi's contributions was a set of fixed hand positions to be used in the course of a treatment; Usui often preferred a more mystical means of diagnosing the patient's problem.

Hayashi initiated and trained Mrs. Hawayo Takata, who brought Reiki to the USA. The U.S. proved to be fertile ground, as Mrs. Takata applied the American spirit of enterprise to Japanese tradition. Mrs. Takata claimed that she had been appointed Grandmaster of Reiki through the lineage of Mr. Chujiro Hayashi, and that there were no surviving teachers of Reiki to be found in Japan after World War II. Her claim of Grandmastership and her allegation that no Reiki teachers remained in Japan have been found to be false, as lineages through people other than Hayashi have been found. Research has discovered that the title of "Grandmaster" does not exist, and is not recognized in Japan.

Nowadays, while Reiki is comparatively rare in Japan, it flourishes in the West. There are essentially two broad groups, or schools: the traditional school and the independent school. The traditionalists claim to teach and practice Reiki strictly as it was taught from Usui's time until Mrs Takata's time, although modern research suggests that training under Usui differed greatly from the way Mrs. Takata taught. Another, separate branch of traditionalists advocate adherence to the (now rediscovered) Japanese school's methods. The independent schools vary greatly in their practices and methods, ranging from those descended through Iris Ishikuro, which fundamentally adhere to traditional Reiki practice but eshew Mrs. Takata's practice of charging $10,000 for attunement to Reiki Master level, to so-called "newer" schools, which either add elements to traditional Reiki or claim to have been independently developed.