The talks at the official palace of the Tibetan spiritual leader lasted about 90 minutes, said an official.
"At the closed-door meeting, high-ranking officials of the government-in-exile including its prime minister Samdhong Rinpoche participated," added the official.
Tenzin Taklha, joint secretary in the Dalai Lama's office, said: "Issues of common interest were discussed at the meeting." He did not elaborate.
Rao flew into Dharamsala around 2.15 pm and headed straight to the headquarters of the Tibetan government-in-exile, which is not recognised by any country. Her flight was late by an hour.
At the airport, Rao refused to take questions from media persons.
Officials of the Ministry of External Affairs in New Delhi refused to comment on the meeting and the purpose of Rao's visit.
The timing of the meeting between the Dalai Lama and Rao, a former ambassador to China, comes days after Menon visited the Chinese capital as the prime minister's special envoy and met the Chinese leadership.
Rao's meeting with the Dalai Lama comes amid China's nuclear deal with Pakistan. There are other areas of differences between the two countries, which fought a war over their border dispute in 1962.
While no one from the Indian government or the Dalai Lama's office was willing to comment on the meeting, China experts say there could be a larger message behind it.
"Whenever there is a perception of China crossing the red lines of core sovereignty-related issues, we react to it by activating the Tibet card," Srikanth Kondapalli, a China expert at the Jawaharlal Nehru University in New Delhi, said.
"This is part of shadow boxing. It's a way of signalling to Beijing India's displeasure over some recent issues like (China's decision to issue) separate visas for Kashmiris," he added.
A source in the Dalai Lama's office said earlier that Rao would discuss issues relating to Tibetan exiles with the Nobel Laureate.
India follows one-China policy and recognizes Tibet as a part of China.
The Dalai Lama, who believes in the "middle-path" policy that demands greater autonomy for the Tibetans, is viewed by the Chinese as a "traitor" who is bent on splitting Tibet from China.
Some 140,000 Tibetans now live in exile, over 100,000 of them in different parts of India. Over six million Tibetans live in Tibet.
Dharamsala: A week after National Security Adviser Shivshankar Menon visited Beijing, Foreign Secretary Nirupama Rao held closed-door talks with the Dalai Lama here Saturday, with a Tibetan official saying "issues of common interest" were discussed.
First Published: Saturday, July 10, 2010, 21:16