Milarepa's transmission of the Kagyu teachings was carried on by Gampopa, the physician from Dagpo. Milarepa had two key students, Rechungpa who was also a wandering hermit, and Gampopa who was a monastic. Gampopa had previously studied the Kadampa traditions, which is a gradual path that includes what is called the Lam Rim teachings. He searched for and eventually met Milarepa, and attained realization of ultimate reality under his guidance. He established monastic institutions, taught extensively and attracted many students. His bringing together of the Kadampa and the Mahamudra teachings has formed the basis of the Kagyu approach as it exists today.
Four of his disciples founded the four major Kagyu schools:
Babrom Kagyu founded by Babrom Dharma Wangchuk
Pagdru Kagyu founded by Phagmo Trupa Dorje Gyalpo
Tsalpa Kagyu founded by Shang Tsalpa Tsondru Drag
Kamtsang Kagyu, also known as the Karma Kagyu School founded by Düsum Khyenpa the 1st Karmapa
Gampopa also dreamt that on the top of his hat, at the very point, there was the feather of an eagle.
Gampopa dreamt that at both ends of the rope that tied the shoes were two silver rings.
Gampopa dreamt that in his left hand he was holding an empty skull (kapala), symbolizing the emptiness of all phenomena as well as the realization of that emptiness.