In 2007 Department of Archaeology, Gujarat State began excavating a site just outside the south wall of the old fort.
Though a small-scale excavation, it yielded enough evidence to support the view that Vadnagar indeed has been a very ancient settlement. A structure, measuring 55 by 55 feet with 12 residential cells for the monks, of a Buddhist vihara or monastery, being in use from the second to the fourth century, has been unearthed. Its identity as a Buddhist monastery has been authenticated by a team of Japanese archaeologists that visited the place and examined the evidences excavated by Y. S. Rawat's team. The unearthed monastery corroborates well with the account of the famous Chinese traveller Hsuan-Tsang, who visited Vadnagar (then known as Anandapur) in the seventh century, that the city had some ten sangharams with about a thousand Buddhist monks.
The present excavation site has yielded more than two thousand artifacts of various types. These include a Buddha idol, an amphora, figurines, a crucible, a grinding stone, seals, a terracotta head wearing a turban, shell bangles, necklace beads, copper and silver coins, and northern black polished ware with inscriptions.
Brick structures indicate construction activity going back from the Solanki period to the Roman times.
Presence of Buddhist monks is once again confirmed by the findings of a small statue of Buddha and Bhiksha Patra (Alms Bowl).
Did such Buddhist monasteries exist in Vadnagar at the time of Hsuang-Tsang’s visit?
Now, we have a definitive answer to the question: "Did the Buddhist monasteries that Hsuang-Tsang saw really exist at Vadnagar?" The recent excavations have produced concrete evidence in the forms of remains of a Buddhist Stupa as well as monks' quarters.