The ancestry of the Shih Tzu is rather obscure, but it is probable that the
breed is primarily of Tibetan origin. The history of the Tibetan "Lion Dogs"
is interwoven with the tenets of Buddhism, which originated in
India. The lion was closely associated with Buddhism, but the lion was not
indigenous to China, so the Chinese and the Tibetan lamas bred their toy
dogs to resemble lions. The Shih Tzu (whose name means "lion" and is
properly pronounced "sheed sue") is reputed to have been the oldest and
smallest variety of the Tibetan "holy dogs" and bears some similarity to
other Tibetan breeds. For much of the long and illustrious history of
China, the breeding of the small "Lion Dog" was a favorite pastime of
succeeding imperial rulers.
Returning military personnel brought some of the first Shih Tzu into the
United States during the late 1940s and 1950s and began breeding programs.
The unique beauty and outstanding temperament of this "new"
breed quickly found favor with the fancy. From the first day of formal AKC
recognition, the Shih Tzu catapulted from a relatively unknown breed
to one of the most glamorous and popular of all canine companions.

(excerpted from the Shih Tzu column of the AKC Gazette,
written by Victor Joris, author of The Complete Shih Tzu)

On September 1, 1969, the American Kennel Club accepted the Shih Tzu as its
116th recognized breed (at that time, there were only about 3,000 Shih Tzu
in the national registry!) In both 2001 and 2002, the Shih Tzu was the #10
most popular breed in the U.S. according to AKC registration statistics.

The AKC Breed Standard (by which Shih Tzu are officially judged in
Conformation competition) says:

The Shih Tzu is a sturdy, lively, alert toy dog with long flowing double
coat. Befitting his noble Chinese ancestry as a highly valued, prized
companion and palace pet, the Shih Tzu is proud of bearing, has a
distinctively arrogant carriage with head well up and tail curved over the
back. Although there has always been considerable size variation, the
Shih Tzu must be compact, solid, carrying good weight and substance.