Answered by Karen from USA | Mar. 06, 2013 21:30
2000 years ago, an emperor believed in Buddhism and he heard that Buddists had custom to hang lanterns on Jan. 15 of Chinese lunar calender, so he ordered all the people and temples to hang the lanterns to show worship for the Buddha.
Later, this custom spread to the whole country and more activities were added on that day to celebrate this holiday.