Hanshan was an enigmatic figure of the Tang Dynasty who originally possessed the image of a poor scholar or a noble, unsullied person. In the Song Dynasty, Hanshan came to be included in Chan Buddhist lineages, where he was depicted either as a mad Chan sage or as an avatar of "Manjusri." How and why did he attain these two identities and have his image transformed during the Song? How did he come to possess status and religious significance in Chan Buddhist lineages? Based on a review of Chan Buddhist literature, this paper asserts that Hanshan was gradually categorized as a "mad sage," a wild figure in the laymen's world, in order to reflect the religious meaning of madness. In addition, the paper explores both the intrinsic meaning as well as the religious and cultural causes influencing the development of the appellation "Hanshan Manjusri." It attempts to explain the establishment of a connection between Hanshan and Manjusri by examining their corresponding spiritual characteristics. In short, the interpretation of Hanshan as a mad sage with a playful attitude towards life represents an alternative characterization that reflects the everyday practices of Chan Buddhists. Although Hanshan is a sage, he acts like an ordinary person and he practices Buddhism in a natural manner in order to transform others. Hanshan's intrinsic innocence corresponds to the pureness of Manjusri. They both possess vigor and intelligence. The external madness of Hanshan and the internal acuity of Manjusri demonstrate the non-duality of phenomena and the nature.