Sky lanterns are airborne paper lanterns traditionally used by ancient people for help purpose. They are constructed from oiled rice paper on a bamboo frame, and contain a small candle or fuel cell composed of a waxy flammable material. When lit, the flame heats the air inside the lantern, thus lowering its density causing the lantern to rise into the air. The Sky Lantern is only airborne for as long as the flame stays alight, after which the lantern floats back to the ground. They can achieve quite a height and launching them in strong winds is not recommended.

According to popular lore, the Kongming Lantern was the first hot air balloon, said to be invented by the sage and military strategist Zhuge Liang, whose reverent term of address was Kongming. They were first deployed at the turn of the 3rd century as a type of signalling balloon or, it is claimed, as a type of spy blimp in warfare. Alternately the name may come from the lantern's resemblance to the hat Kongming is traditionally shown to be wearing.

It is likely that this technological discovery is misattributed because of the Chinese historical practice of attributing great discoveries to significant historical figures rather than to the actual inventors. According to the sinologist and historian of science Joseph Needham, the Chinese experimented with mini-hot air balloons from as early as the 3rd century BC - which suggests that the attribution of its invention to Kongming is indeed apocryphal.

Later non-military applications were employed as they became popular with children at carnivals. These lanterns were subsequently incorporated into festivals like the Chinese Mid-Autumn and Lantern Festivals. Pingsi in the Taipei County of Taiwan holds an annual Lantern Festival in which sky lanterns are released.

The people of Northern Thailand also have a variation on sky lanterns. These are known as Khoom Loy.