The renowned spiritual leader tells why material things can't satisfy the soul, why compassion can, and the startlingly simple secret to having no regrets.

He calls himself "a simple Buddhist monk"—a man who rises at 4 a.m. and spends hours each day in prayer and meditation. Yet his nonviolent efforts to free his country, Tibet, have made His Holiness the Dalai Lama an international symbol of peace during the past four decades. In the 46 countries the Dalai Lama has been invited to visit, thousands of people have flocked to hear him speak on what he believes is his most meaningful message—that compassion toward others is the surest path to happiness.

I met with His Holiness during one of his many trips to Washington, D.C., a trip that also included his visit with President Bush at the White House. About a dozen Buddhists in colorful Tibetan attire waited in the hallways of the hotel where the Dalai Lama stayed, hoping for a chance to hear him speak. In our time together, we talked about everything from whether he harbors any regrets to what he considers a good day—and how every person can find the secret to a joyful life.

Oprah: Though many Americans have read your book about happiness, some still don't understand how to achieve it. How can someone attain true happiness in a culture that emphasizes materialism?

Dalai Lama: Even when a person has all of life's comforts—good food, good shelter, a companion—he or she can still become unhappy when encountering a tragic situation. Physical comforts cannot subdue mental suffering, and if we look closely we can see that those who have many possessions are not necessarily happy. In fact, being wealthy often brings even more anxiety. On the other hand, those who don't have a life filled with luxury may have a home filled with compassion, based on their choice to be content and to practice self-discipline. Even when we have physical hardships, we can be very happy.

O: So happiness begins in our minds?

DL: Yes. That's why mental happiness is more important than physical comfort. Physical comfort comes from the material. But material facilities cannot provide you with peace of mind.

O: That's right.

DL: When you are discontent, you always want more, more, more. Your desire can never be satisfied. But when you practice contentment, you can say to yourself, "Oh yes—I already have everything that I really need."

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