Puppets, a kind of wooden figure whose movements are manipulated by artists, were frequently used in ancient Chinese singing and dancing activities and dramas. The uniqueness of substituting human beings for puppets has drawn tremendous attention from scholars. However, despite previous research on the long development process of puppet dramas, a considerable number of details remain neglected, and behind these details lies an abundance of complicated religious factors. Therefore, this paper uses several fragments as entry points in terms of puppet dramas’ modeling, materials, craft, rites, function, artists, organization, and other aspects to comprehensively analyze the influence of witchcraft, Daoism, and Buddhism on China’s puppet dramas. This research first unveils that a ferocious appearance and mahogany as a material, both used in puppets, are outer manifestations to reveal the magical power of witchcraft. Next, the rites performed in Li Yuan Jiao using ritual puppets were characterized by mystery in their implication and ambiguity in their religious sect, which was related to the attempt to hide their notorious identities as wizards on the part of the artists. Third, general puppet artists enjoyed a fairly high social status, conferred by their semi-religionist identity and the puppet dramas’ historical status. Finally, the improvement in the puppet-making process and the emergence of skeleton-style puppets embody the secularization of the spread of Buddhism.