From the Tang era (618–907) to the present day, controversy over the translation and authenticity of the Chinese version of the Śūraṃgama-sūtra, which appeared at the end of the early Tang, has been ongoing. The scholar-official Fang Rong (d. 705) has been considered either the translator or the forger of the sutra, while its Chinese elements, especially those from Daoism, have been used as major evidence that the text is apocryphal. By uncovering new historical sources and critically analysing the arguments of modern scholars, this article undertakes a new examination of this old controversy from the perspective of cultural interaction through scriptural translation. The attribution of translators seen in the version of the sutra preserved in the Fangshan stone-canon, as well as the historical context of the translation, proves that—for specific politico-historical reasons—the two early accounts by Buddhist bibliographer Zhisheng (fl. 669–740) do not contradict but rather complement each other. New and solid evidence also supports the argument that Fang Rong indeed participated in the sutra’s translation; moreover, he contributed its Chinese cultural, intellectual and religious elements, and graceful literary style during the process. Additionally, the relationship between early Chan Buddhism, Fang Rong, and Chan master Huaidi, who verified the translation, may have motivated them to make certain embellishments upon the sutra’s central theme of Tathāgatagarbha doctrine. This article thus confirms the Śūraṃgama-sūtra to be a major Mahāyāna scripture that contains elements of the Chinese cultural tradition, and that it in turn has exerted tremendous influence on this tradition.