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In 2008, this paved way for the transition from absolute monarchic rule to a parliamentary democratic constitutional monarchy, with Thimphu as the headquarters of the new government, with the national defined objective of achieving "Gross National Happiness" (GNH) concomitant with the growth of Gross National Product (GNP).Thimphu is situated in the constricted, linear valley of the Raidāk River, which is also known as the Thimphu River (Thimpu Chuu).In 2005, the fourth king of Bhutan announced his decision to hand over the reins of his kingdom to his son Prince Jigme Khesar Namgyal Wangchuk.The coronation of the king was held in Thimphu at the refurbished Changlimithang Stadium and coincided with the centenary of the establishment of the House of Wangchuck.Thimphu, as the political and economic center of Bhutan, has a dominant agricultural and livestock base, which contributes to 45% of the country's GNP.

The National Constitution Committee in Thimphu started drafting the Constitution of the Kingdom of Bhutan in 2001.

Thimphu is the fourth highest capital in the world by altitude and is spread over an altitudinal range between 2,248 metres (7,375 feet) and 2,648 metres (8,688 feet).

Unusually for a capital city, Thimphu is not served by an airport, but relies on the Paro Airport connected by road some 54 kilometres (34 miles) away.

This development is ongoing with financial assistance from the World Bank and Asian Development Bank.

The culture of Bhutan is fully reflected in Thimphu in respect of literature, religion, customs, and national dress code, the monastic practices of the monasteries, music, dance, literature and in the media.

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Thimphu contains most of the important political buildings in Bhutan, including the National Assembly of the newly formed parliamentary democracy and Dechencholing Palace, the official residence of the King, located to the north of the city.