Tenganan, northwest of Candidasa, is situated about 5km from the main road. Tenganan is a symmetrically laid out Bali Aga village with a walled homes and unique crafts. Bali Aga was the original inhabitant of Bali, before the arrival of Hindu Javanese. Tenganan retains its ancient pre-Hindu customs through a strong code of non-fraternization with outsiders, further enforced by the protection of its surrounding walls.
Tenganan is charming and has some very fascinating authentic traditional festival (ritual dances and gladiator) like Bali Aga of Tenganan often holds the battle between local youths. The people of Tenganan are skilled in the unique technique of weaving, called the 'double ikat', where the belief in the magical power of the fabric is essential in bringing out the beauty of the ikat cloth.
There are some versions of story telling us the history of Tenganan village. Some say that the word Tenganan was derived from the word "tengah" or "ngatengahang" which means, "move to the inner area". This derivation of word was having a relation with the movement of the villagers from the seaside to a rural area, in which the position of this village is in the middle of hills, which are western hill (Kauh Hill) and eastern hill (Kangin Hill).
Another version reveals that the people of Tenganan came from Peneges village, located in Gianyar, precisely near Bedahulu. Based on the folklore, once upon a time Bedahulu King lost one of his horses. The people looked for it to the east and the horse was finally found dead by Ki Patih Tunjung Biru, the King's right hand. For his loyalty, the King finally gave Ki Patih Tunjung Biru an authority to govern the land as far as the aroma of the carrion of the horse can be smelled. Ki Patih was an intelligent person, so he cut the carrion into pieces and spread it as far as he could. Thus he received a quite large area.