Dignāga's epistemology accepted only "perception" (pratyaksa) and "inference" (anumāṇa) as valid instruments of knowledge and introduced the widely influential theory of "exclusion" (apoha) to explain linguistic meaning.

[4] According to Richard P. Hayes "some familiarity with Dinnaga's arguments and conclusions is indispensable for anyone who wishes to understand the historical development of Indian thought.

"[5] Dignāga was born in a Brahmin family[6] at Seeyamangalam also known as Simhavakta near Kanchipuram in what is now the Indian state of Tamil Nadu, and very little is known of his early years, except that he took Nagadatta of the Pudgalavada school as his spiritual preceptor, before being expelled and becoming a student of Vasubandhu.

In chapter one, Dignāga explains his epistemology which holds that there are only two 'instruments of knowledge' or 'valid cognitions' (pramāṇa); "perception" or "sensation" (pratyakṣa) and "inference" or "reasoning" (anumāna).

[12]According to Dignāga our mind always takes raw sense data or particulars and interprets them or groups them together in more complex ways, compares them to past experiences, gives them names to classify them based on general attributes (samanyalaksana) and so forth.

[14] For Dignāga, sensation is also inerrant, it cannot "stray" because it is the most basic and simple phenomenon of experience or as he puts it: "it is impossible too for the object of awareness itself to be errant, for errancy is only the content of misinterpretation by the mind.

For this to occur, the following must be true:[19] Richard Hayes interprets these criteria as overly strict and this is because he sees Dignāga's system as one of rational skepticism.

Dignāga's epistemology, argues Hayes, is a way to express and practice the traditional Buddhist injunction to not become attached to views and opinions.

And, since there is no evidence that there exist any fully omniscient beings, the best available working hypothesis is that no one's thinking is immune from errors that require revision in the face of newly discovered realities.

[11] During Dignāga's time, the orthodox Indian Nyaya school and also Hindu Sanskrit grammarians (such as Bhartṛhari) had discussed issues of epistemology and language respectively, but their theories generally accepted the concept of universals which was rejected by most Buddhist philosophers.

[24] This difficulty has also led scholars to read Dignaga through the lens of later authors such as Dharmakirti and their Indian and Tibetan interpreters as well as their Hindu Nyaya opponents.

Because of this tendency in scholarship, ideas which are actually innovations of Dharmakirti and later authors have often been associated with Dignaga by scholars such as Fyodor Shcherbatskoy and S. Mookerjee, even though these thinkers often differ.

It presents perception as a bare cognition, devoid of conceptualization and sees language as useful fictions created through a process of exclusion (apoha).

The Sanskrit text was initially thought to be lost by modern scholars, but then a manuscript of the commentary by Jinendrabuddhi was discovered.