Perhaps the most important idea developed in the Upanishads is the concept of karma; no other idea so universally pervades all aspects of Hinduism and the philosophies and religions that react against or develop out of Hinduism. At the most basic level, karma means "action," that is, anything that you do. "Action," of course, implies an "actor," someone performing the action. As the notion of karma developed (as early as the Brahmanas) into a larger-scale device for explaining the world and its changes, it never lost this focus on the individual actor; ultimately, karma and its consequences remain solely the responsibility of the individual. Every human being gets what he or she deserves, no more, no less.

In the Upanishads , karma operates as a causal explanation for everything that happens, particularly to human beings. All one's actions determine one's future actions; if one behaves evilly, one will become evil; if one behaves well, one will become good (Brihad-Aranyaka Upanishad 4.4.5). In other words, all actions you take are the results of actions you have taken in the past; all actions you take are also the causes of future actions (how would you compare this theory of causation with Aristotle's Four Causes or the Five Agents in Chinese thought?). In one sense, the universe becomes rigidly mechanical since every action you take has been predetermined by previous actions—you can't change course. However, unlike a strictly mechanical universe, every action you take as well as its consequences is your responsibility; it was you at some point in the past that caused you to become whatever you are now. No god or divinity controls your actions or the consequences of your actions. Karma is further differentiated from mechanism in that although the actions you take in this life are already predetermined by previous actions, you can still choose the manner in which you will perform those actions: with charity, or duty, or greed, or lust, or kindness, or whatever. This is what Krishna is enjoining on Arjuna: what Arjuna is to perform has already been predestined by what he has done in the past, but Arjuna can choose to perform these actions from a sense of duty rather than a sense of profit.

The idea of karma was combined with the idea of death after death, that is, reincarnation, to form the concept of samsara, or the cycle of birth and rebirth. Your actions in this life predetermine the nature of your rebirth; your current life (and this includes your moral disposition) has been predetermined by the sum total of actions you have taken in previous lives. In the social order, karma produces the "four colors" or "castes" which form the hierarchy of society; this social order reflects the rigorous set of rewards and punishments that accrue to one from life to life. A well-lived life guarantees rebirth into a higher social order and a basely lived life ensures rebirth into lower social orders; the social order, then, reflected Rita, or the moral order of the universe.

The idea of samsara closes off any possibility of some eternally happy afterlife; one is doomed to live on and on from birth to birth committing actions that will necessitate further birth. Intellectual Hinduism, therefore, turned to the idea of moksha, or "liberation," as the goal of atmansiddhi. Gaining release from the cycle of birth and rebirth is far more preferable than an eternity in a constantly changing and illusory universe. This release, however, is not possible as long as one piles of karma which makes future incarnations necessary. How does one get rid of karma ? Although one cannot avoid action, one can do action from kindness or duty or selflessness; in that way, one can use up karma without producing any more karma . Once karma is used up, there remains no cause for any further incarnation and one's atman , or undying soul, is freed from the world of change.