What is known about the afterlife beliefs of the Celtic peoples is sketchy and often contradictory. The classical authors are unanimous in declaring that the Celts held an unshakable belief in a happy life after death. It made them fearless in battle and was so strong that debts were said sometimes to be deferred until the next life. While this belief in personal survival is well attested, there is much less agreement on the details of the fate of the dead.
Several classical authors say that the Druids taught the transmigration of souls. In that doctrine of reincarnation, spirits may be reborn into any of nature's forms - human, animal, or even inanimate things. That doctrine is supported by evidence from the tales. We find humans becoming pools of water, their own descendants, or sacred animals. Fintan, last survivor of the first folk, lived successive lives as a man, a stag, and an eagle. The two great Bulls of Erin, the Brown and the White, began their existence as a pair of swineherders and underwent rebirth until they reached their exalted state as sacred bulls. In Welsh tales, the wizard Gwydion undergoes a series of animals lives, and the Irish tale of Edain depicts transformations or rebirths in human, insect, ant inanimate forms.
If we assume that these tales reflect a doctrine of the fate of souls, then we might conclude that human spirits can be reborn, and into non-human as well as human forms. A non- human rebirth was clearly not always a punishment. Rebirth as an animal could involve increase in honor or spiritual authority. Mortal humanity was only one of the many kinds of beings who kept the World Order whole.
Of course, these tales may also be interpreted in a mythological, initiatory, or shamanic way. They may represent the magical journey of a particular individual rather than remnants of Pagan afterlife belief. So while the tales strongly suggest a belief in reincarnation and transmigration among the Celts, they fall short of proving that it was a broad, general doctrine.
When we look at the archeological remains of Celtic burials, one thing becomes clear: the Celts, at some periods at least, expected their afterlife to be very similar to the tribal life they left behind. Chieftains both male and female, were buried either whole or after cremation, with chariots, jewelry, weapons, drinking equipment and food. They clearly expected to retain both their status and their obligations. The tales also support this model. When various heroes are transported to the Otherworld, they find a land of perpetual feasting, horse racing and revelry, not unlike the Vikings' Valhalla. These tales give little evidence of an expected reincarnation of any sort. However, it is unclear that the beings met in these journeys are actually mortal spirits and not "sidhe-folk" of some stranger kind.
The destruction of Celtic Paganism by the rise of Christianity is nowhere more evidenced than in afterlife beliefs. Still, as moderns working to revive the Old Ways, we need to formulate some sort of more or less coherent attitude toward death, the afterlife, and the place that the Ancestors hold in our worship. A speculative reconstruction of a Celtic afterlife doctrine might be expressed thus:
For almost everyone, the afterlife will be an improved version of this one. The soul is guided by proper ritual, and by the King of the Dead, to Tir na Marbh, Land of the Dead, where they dwell happily. This land is a lovely and joyous place, where the songs of the Goddess' birds ease pain and sorrows where feasting and entertainment are the order of the day. The magical Boar and Stag are hunted, and the Mead of Poetry flows freely. Many tales tell that the souls of the newly dead linger, as shades, in the living world until Samhain eve. Then Donn, the King of the Dead, winds his horn and calls all souls to his House, Teach Duinn, and then west across the Sea to Tir na Marbh.
While we find no doctrine of universal reincarnation among the Celts, it is clear that Spirits are often born into flesh for various reasons. For some, the Way of return is their fate. Those chosen by the Powers for some destiny, or who choose rebirth themselves, or are placed under a geas by a magician, may return to the mortal world to work out their path. We may know a series of rebirths until our specific destinies are fulfilled.
There is no evidence, at this time, that the Celts believed in a process of regular reincarnation leading to movement up any sort of spiritual ladder or stairway. Spirits came into flesh to aid their foik, to do the Gods' work, etc.
All Indo-European peoples seem to have practiced, in various ways, a Cult Of the Dead. This seems to have included veneration of the generations immediately passed, as well as more broadly important cultural figures. The Grandmothers and Grandfathers must be respected and given proper offerings if the clan's prosperity is to thrive. The Graeco-Roman Cult of Heroes was probably present in some form, remembered in Celtic countries in their active Christian Cult of Saints.
All over the Aryan world it was known that by great deeds of martial, magical, or other sorts, an individual could become more like one of the Powers. This is the mark of the Hero (a word we will use both for men and for women). He or she must display in their nature and action one of the archetypes by which the tribe lives. The blacksmith, the bard, the warrior, the ruler, in fact all traditional professions, have magical power. When a mortal fills the traditional image of a skill especially well and when her deeds do very well for her folk, she may become a hero.
In a very real way, such a person makes a sacrifice of themselves for their folk. Often, the Hero must give up many of the potentials of common life, take on terrible risk and pain, even die young. Most of us hope to be left in peace by the Powers, to offer to Them, and to be blessed in return, without being singled out for a great "destiny." So we can only be humble and grateful to those who give themselves to let the Light and Shadow show through their lives. When such folk die, their may become Noble Spirits - guests at the feasting table of the Shining Ones. They gain insight and wisdom and the ability, to aid ~ living tribes folk in some of the same ways as the God/desses themselves. In effect, these great mortals become Powers themselves, able to bless in return for the gifts of the sacrifices.