This thesis, a comparison of the concepts of buddha-nature and dao-nature in the medieval period (from the 5th to the 10th centuries) of China, presents a historical investigation of the formation of the idea that insentient things are able to possess buddha-nature in medieval Chinese Mahāyāna Buddhism. In Chinese Mahāyāna Buddhism, the concept of buddha-nature was originally defined as a potential possessed by sentient beings that enabled them to achieve buddhahood. From the 6th century, the concept was reinterpreted within the Chinese Buddhist tradition so that insentient things were also able to possess buddha-nature. Recent scholarship has pointed out that the idea of insentient things having buddha-nature is a combination of Buddhist and Daoist ideas based on the concept of the all-pervading Dao found in the Zhuangzi 莊子. In this sense, buddha-nature seems to be interpreted as equivalent with the Dao of Daoism. My project suggests that the reinterpretation of buddha-nature in association with the insentient realm should be elucidated in a more nuanced way than the idea of all-pervasiveness of the Dao. A historical, doctrinal investigation of the intellectual formation of the concept of buddha-nature in Chinese Mahāyāna Buddhism demonstrates a new interpretation of buddha-nature in the context of insentient things having buddha-nature. Further, through a historical investigation of intellectual exchange between Buddhism and Daoism, some evidence provided in this project illustrates that the idea of insentient things having dao-nature in Daoism was not inherited from Buddhism, but drawn from Daoist tradition. This new perspective is different from that of some contemporary scholars who have claimed that the idea of insentient things having dao-nature was borrowed from Chinese Buddhism. A chronological investigation of the discussion of nature in Chinese thought demonstrates that the idea of insentient things having buddha-nature incorporates earlier Daoist traditions found in Arcane Study.