The 46-year-old woman has told police she was walking through a crowded market area of the town, famed for its Tibetan community and home to the Dalai Lama, on Tuesday evening when the attack occurred.
The woman, who had been travelling in India for about a month and was alone in Dharamsala, said she passed out after being grabbed by the unidentified men.
“She says that after waking up she realised that she had been assaulted…and decided to approach us a day later,” Abhishek Dhullar, police superintendent of Kangra district which includes Dharamsala, said.
“We have registered a case of rape and are investigating the matter. No one has yet been arrested,” Dhullar told AFP.
Police are awaiting detailed results of the woman’s medical examination, seeking witnesses to the incident and studying CCTV footage of the area which was crowded at the time with shoppers and families, he said.
There were no immediate details on how the woman passed out or where she was when she came to.
India introduced tougher laws against sex offenders in the wake of the fatal gang-rape of a student in New Delhi in December 2012 that sparked mass street protests and international outrage.
But violence against Indian women continues at alarming levels in the world’s second most populous country.
A series of foreign women have also reported sex attacks while visiting India. In February, a Japanese woman accused a tourist guide of drugging and raping her in the historic city of Jaipur.
Five men were arrested in January over the alleged gang-rape of a Japanese tourist who was held as a sex slave for nearly a month in the country’s east.
And six men are currently on trial for the rape of a Danish tourist in 2014 in Delhi.