In the later years of his life, the XVth Gyalwang Karmapa Khakhyab Dorje stayed in strict retreat on the mountain behind Tsurphu Monastery. To his disciple, Golok Gelong ]ampal Tsultrim, he gave a protection amulet, wrapped in multicolored thread, and said, "This is a protection for you. In the future, a messenger will come in great haste from Palpung Monastery. At the time you should open this amulet." One month later, on the 17th day of the third Tibetan month, in the Water Dog year (1922), Khakhyab Dorje's mind entered into the expanse of all phenomena.
Through his pure vision, the XI Tai Situpa, Pema Wangchok Gyalpo, saw the precious reincarnation of the Karmapa, and that he was born in the town of Denkhok of the Derge region in Kham to the Athubtsang family. His father was named Tsewang Phuntsok and his mother, Kalzang Chodron. Tai Situ Rinpoche sent a messenger to Tsurphu with the specific purpose of asking: "If you have the sacred letter of prediction from the previous Karmapa, please bring it to me." The administration of Tsurphu Monastery looked for the letter, but could not find it. Lodro, the General Secretary of Palpung Monastery, and Bakdro, the General Secretary of Tsurphu, met with His Holiness the XIIIth Dalai Lama in order to formally request his confirmation that this child of the Athubtsang family was the unmistaken reincarnation of the previous Karmapa. In accordance with the vision of his pure wisdom, the Dalai Lama bestowed the Buktham Rinpoche, the official letter with his seal confirming the child as the XVIth Gyalwang Karmapa.
When Gelong ]ampal Tsultrim heard this news, he opened the protection amulet given to him by the previous Karmapa and found the letter inside, which was written in symbolic language. He gave the letter to Tsurphu Monastery, and when it arrived finally at Palpung and was decoded, its meaning was found to correspond exactly with the pure vision of the XIth Tai Situ Rinpoche.
When the XVIth Gyalwang Karmapa was eight years old, Tai Situ Rinpoche enthroned him at Palpung Monastery in the ceremony that brought together rinpoches and lamas from all the Kagyu monasteries. At that time, Situ Rinpoche offered the Karmapa the name, Palden Rangjung Rigpe Dorje, which came from a treasure, found by Chokgyur Lingpa and containing a prophecy of Guru Rinpoche with names of future Karmapas. Afterwards, Situ Rinpoche accompanied the XVIth Gyalwang Karmapa to his seat at Tsurphu Monastery. From XIIIth Dalai Lama, the Karmapa received the hair cutting ceremony and the name, Thubten Rikdrol Yeshe. Situ Rinpoche performed a second, profound and extensive enthronement at Tsurphu.