How religion came to be.

Human beings have a strong will to survive, an instinct that is ‘hard wired’ into the fiber of our bodies. (1)

We also have certain knowledge of our own mortality; we know that like our ancestors, we are going to die at some point.

This causes a crisis in the mind, which many resolve with a functional self-delusion, that of an Afterlife.

“When the objective facts threaten the ego and its integrity, we experience what social psychologists call "confirmation bias," a kind of cognitive dissonance known more recently as "Morton's Demon." We dismiss certain facts incompatible with our myth of ourselves in favor of other less threatening and more corroborative ones. We twist the truth. And we become convinced of the veracity of this twisted truth. And we do all this unconsciously. We don't even know we're doing it. “
(2)

When we posit an afterlife, it is ‘rational’ to populate it with the ‘souls’ and spirits of those who have gone before. It is further reasonable that these spirits go about their business in much the same way as on this side. Tribal Chieftains, great warriors, heroes go on ruling and leading in death just as they did in life.

We know that real life people can gain almost mythic qualities as their stories are told and retold, each generation adding more and more to the tale until what was once a great chief takes on qualities of the divine… Gods are born of our innate fear of death.

Certain people have always claimed a connection with this other side, this functional delusion of a life after death. They have the answers and the common people naturally look to them for guidance… thus, the priesthood was born.

(1)    http://adventure.howstuffworks.com/survival/wilderness/wired-for-survival1.htm

(2)    http://www.psychologytoday.com/blog/evil-deeds/200811/truth-lies-and-self-deception