Once upon a time, there was an ashram in the Himalayas where a great sage and his disciples lived. They all respected their Guru not only for his knowledge, but also for his love and kindness towards all. 
Because of his kind nature he often accepted disciples who were spiritually immature. This resulted in silly misunderstandings and quarrels among some of his disciples breaking the peace and tranquility of the hermitage. 
One day the Guru was very disturbed to see their immature behavior even after his repeated advice. It saddened his good heart to see his disciples turning into slaves of jealousy and anger. His compassion did not let him throw anyone out of his hermitage. Instead, he sincerely prayed to God to give him a solution. He fasted for many days, and spent the days by himself in meditation and prayer. 
After some days of fasting and intense prayers, he had a vision of the Lord. In the vision, God asked him why he was sad. He explained everything and requested Him to come to the ashram and free their minds of jealousy, anger, and desire for power. To his surprise, the Lord immediately agreed and told him that He would come to the ashram on one condition: He would come in disguise as one of the disciples, and nobody would know who was God in disguise. The Guru announced to his disciples about his vision and Bhagavans kind decision to come as one of his disciples. 


The disciples were very happy when they heard about Bhagavans plan to come and live with them in disguise. But they did not know who was Bhagavan and everybody was very gentle and considerate to each other thinking that the other disciple might be Bhagavan Himself in disguise. When they lived like that for a few months, peace and tranquility filled their hearts as well as the hermitage. 
In their pure minds, they felt the Lords blissful presence and they started treating each other, and thinking of each other, as none other than Bhagavan Himself in disguise! The whole ashram was reverberating with blissful positive vibrations emanating from everyone! This great sage and his disciples told their experience to others and inspired them also to respect each other and to pranam to the divinity in every one. 
Since then, everybody started greeting each other saying namaste with folded hands : namah + te, meaning I bow to That (Divinity) inherent in you.
In Sanskrit the word isnamah + te = namaste which means I bow to you - my greetings, salutations or prostration to you. The word namaha can also be literally interpreted as "na ma" (not mine). It has a spiritual significance of reducing one's ego in the presence of another.
Why Namaste:


Namaste could be just a casual or formal greeting, a cultural convention or an act of worship. However, there is much more to it than meets the eye. The real meeting between people is the meeting of their minds. When we greet one another with namaste, it means, may our minds meet, indicated by the folded palms placed before the chest. The bowing down of the head is a gracious form of extending friendship in love, respect and humility.
Spiritual Significance of Namaste:


The reason why we do namaste has a deeper spiritual significance. It recognizes the belief that the life force, the divinity, the Self or the God in me is the same in all. Acknowledging this oneness with the meeting of the palms, we honor the god in the person we meet.
May the Lord help us also to see His divinity in everybody! Namaste!