Just what form the referendum will take was not immediately clear, but he proposed what could be a major change in the centuries-old system to choose the spiritual and political head of the Tibetans.
"If people feel that the institution of the Dalai Lama is still necessary, it will continue," he told reporters during a gathering of religious leaders from around the world in this northern Indian city.
"When my physical condition becomes weak, and there are serious preparations for death, then this event should happen," said the 72-year-old winner of the 1989 Nobel Peace Prize, referring to the referendum.
The Dalai Lama gave no timeframe for the vote, adding that "according to my regular medical checkup I am good for another few decades."
China, which has ruled Tibet with a heavy hand since its Communist-led forces invaded in 1951, immediately condemned the proposal.
"The Dalai Lama's statement is in blatant violation of religious practice and historical procedure," the Foreign Ministry said in a statement faxed to The Associated Press.
For centuries, the search for the reincarnation of religious leaders, known as lamas - including the Dalai Lama, Tibet's spiritual head - has been carried out by Tibetan monks following the leaders' deaths.
Tibetans fear China will control the search for a successor once the Dalai Lama dies, further eroding the Himalayan region's unique Buddhist culture.
Those concerns were heightened in August when Beijing moved to tighten its grip over Tibetan Buddhism by asserting the officially atheistic communist government's sole right to recognize Buddhist reincarnations of the lamas that form the backbone of the religion's clergy.
The Tibetan leadership in exile has begun exploring several possible ways to prevent this.
First a referendum would be held to decide if Tibetan Buddhists want to continue with the Dalai Lama system.
If they did, the Dalai Lama said he would either be reincarnated after his death outside China or he would choose a new Dalai Lama before he died.
"The very purpose of reincarnation is to carry out the tasks of the previous life that are not yet achieved," The Dalai Lama said. "If I die while we are still refugees, my reincarnation, logically, will come outside Tibet, who will carry out the work I started."
The Tibetan spiritual leader also raised the possibility of naming a new Dalai Lama while he was still alive.
The Dalai Lama, who had proposed this during an interview in Japan last week, fended off criticism that this would be a break with Buddhist tradition, saying there was a precedent of one incarnation being named while the other was still alive.
The Dalai Lama said one of his teachers, the Lama Trogye Trichen, was recognized as a reincarnated Lama while his predecessor was still alive.
However, the Dalai Lama, acknowledged that the Tibetan exile leadership had not yet decided exactly what course to follow.
"Serious detailed discussions have not yet started," he said.
The Dalai Lama, who has worked to make the Tibetan exile leadership more democratic, acknowledged his death would be difficult for many Tibetans.
"If I die today there will be some setback to the Tibetan struggle," he said "But the Tibetan spirit will not go away with my death."
The Dalai Lama reiterated that he wants "real autonomy" for Tibet, not independence. He has lived with followers in exile in India since fleeing Chinese soldiers in 1959.