Hilton described his research process as "reading tales and legends of the great missionary travellers who explored all Central Asia centuries ago" — his characters in the novel are themselves shown reading books by real missionary explorers, a detail that doubles as a signal of his own sources. Ed Bernbaum, a comparative-religion scholar who later wrote a study of the Shambhala myth, traced Hilton's inspiration to a single garbled, second-hand account of Shambhala that had reached him through this missionary literature — "very, very garbled," in Bernbaum's assessment, and far from a faithful rendering of the Kalachakra tradition.
A second major likely source is the botanist and explorer Joseph Rock, whose National Geographic articles on Yunnan and the Naxi borderlands were widely read in the period Hilton was writing — researchers have identified more than twenty specific geographic correspondences between a single Rock article and details in Lost Horizon, though Hilton himself never publicly confirmed the connection. A third candidate is the Hunza Valley in what is now Pakistan, which Hilton visited some years before publishing the novel.