During the early periods the newcomers from north and south were integrated into the Newar society of the valley, they became Newars in process. This further contributed to the cultural fabric of Newar society. Therefore, “Newar” is not an ethnic term but a cultural term denoting the very rich and complex culture of the society of the valley. 
In fact, the Newars were a ‘nation’ apart, until they merged into the larger Nepal formed during the eighteenth century by a large and powerful group that came from outside Kathmandu Valley. These later arrivals, the Shahs of Gorkha and other Chhetris and Brahmans, dominated the valley in short order and set about to unify the country politically, while the Newars underwent a significant process of change.

Today the term ‘Newar’ embraces people of both Mongoloid and Mediterranean physical types who speak both Nepali, an Indo-Aryan language, and Newari, a Tibeto-Burman language which includes some half a dozen dialects.

Because of the complexities in the composition of Newar society, scholars in the past have developed various interesting theories about their origins. The Newari language, although greatly influenced by Sanskrit, is still distinctly a Tibeto-Burman tongue. Although it uses Devanagri script today, it does have its own script as well. Sylvain Levi put forward the theory that Newars migrated to Nepal from “regions north of the Himalayas”.
Some other scholars suggest that the Newars may have originated in South India, with ties or distinct similarities to a Hindu community on the Malabar Coast called the Nair, or Nayar. This theory was probably based on the mere phonetic similarity of terms that describe them and one or two other coincidences of customs, not believing either of these theories complete. Christoph von Furer-Haimendorf draws his own conclusion that “the bulk of the Newar people had been settled in the Nepal Valley since prehistoric times.”

Regmi, however, speculates that the early Newars may have an ancestry connected with both the Kiranti and the Lichhavis, one-time rulers of the Nepal Valley.
During the course of history a considerable amount of cultural influence has been exerted on the Newar culture by various immigrant groups. These immigrants were ultimately absorbed into the Newar community. Of all the people who migrated to the Nepal Valley, the Malla Kshatriyas of India were the most distinctive.