King Ajatasattu sponsored the First Council. It was convened in 544 B.C. in the sattaparnaguha Cave situated outside Rajagaha three months after the Buddha had passed away. A detailed account of this historic meeting can be found in the Cullavagga of the Vinaya Pitaka.
According to this record the incident which prompted the Elder Mahakassapa to call this meeting was his hearing a disparaging remark about the strict rule of life for monks. This is what happened. The monk Subhadda, a former barber, who had ordained late in life, upon hearing that the Buddha had expired, voiced his resentment at having to abide by all the rules for monks laid down by the Buddha. Many monks lamented the passing of the Buddha and were deeply grieved. However, the Elder Mahakassapa heard Subhadda say: "Enough your Reverences, do not grieve, do not lament. We are well rid of this great recluse (the Buddha). We were tormented when he said, 'this is allowable to you, this is not allowable to you' but now we will be able to do as we like and we will not have to do what we do not like."
Mahakassapa was alarmed by his remark and feared that the Dhamma and the Vinaya might be corrupted and not survive intact if other monks were to behave like Subhadda and interpret the Dhamma and the Vinaya rules as they pleased. To avoid this he decided that the Dhamma must be preserved and protected. To this end after gaining the Sangha's approval he called to council five hundred Arahants. Ananda was to be included in this provided he attained Arahanthood by the time the council convened.
With the Elder Mahakassapa presiding, the five-hundred Arahant monks met in council during the rainy season. The first thing Mahakassapa did was to question the foremost expert on the Vinaya of the day, Venerable Upali on particulars of the monastic rule. This monk was well qualified for the task as the Buddha had taught him the whole of the Vinaya himself. First of all the Elder Mahakassapa asked him specifically about the ruling on the first offense [parajika], with regard to the subject, the occasion, the individual introduced, the proclamation, the repetition of the proclamation, the offense and the case of non-offense. Upali gave knowledgeable and adequate answers and his remarks met with the unanimous approval of the presiding Sangha. Thus the Vinaya was formally approved.
The Elder Mahakassapa then turned his attention to Ananda in virtue of his reputable expertise in all matters connected with the Dhamma. Happily, the night before the Council was to meet, Ananda had attained Arahantship and joined the Council. The Elder Mahakassapa, therefore, was able to question him at length with complete confidence about the Dhamma with specific reference to the Buddha's sermons. This interrogation on the Dhamma sought to verify the place where all the discourses were first preached and the person to whom they had been addressed.
Ananda aided by his word-perfect memory was able to answer accurately and so the Discourses met with the unanimous approval of the Sangha. The First Council also gave its official seal of approval for the closure of the chapter on the minor and lesser rules, and approval for their observance. It took the monks seven months to recite the whole of the Vinaya and the Dhamma and those monks sufficiently endowed with good memories retained all that had been recited. This historic first council came to be known as the Pancasatika because five-hundred fully enlightened Arahants had taken part in it.