Worldwide, contemporary measures of the success of health development programs have been mostly in terms of the reduction of mortality and morbidity as well as increasing longevity. While these goals have yielded much-needed health improvements, the subjective outcomes of these improvements, as experienced by individuals and the communities, have not been considered. Bhutan, under the overarching policy of Gross National Happiness, has provided due consideration to these subjective indicators. Here, we report on the current status of health and happiness in Bhutan as revealed by conventional objective indicators and subjective Gross National Happiness indicators. The current literature on health in Bhutan in relation to the Gross National Happiness Survey conducted by the Centre of Bhutan Studies has been reviewed. Bhutan has made great strides within a short period of modernization, as shown by both objective and subjective indicators. Tremendous challenges lie ahead to achieve the ultimate goal of health and happiness, and how Bhutan articulates its path to modernization may be a lesson for the rest of the world.