Nihilism or 'everything is non-existent' (sabbam natthî'ti) has been around for a long time in India going maybe as far back as the antiquity of the Upanishads. It was around during the time of the Buddha and it may have even appeared in Buddhism in Madhyamaka which is based on Nagarjuna's interpretation of the Buddha's teachings.
In Nagarjuna's Pratyaya pariksa, which is the first chapter of his famous Mulamadhyamakakarika we are left with an unmistakably nihilistic view according to Thomas E. Wood (Nagarjunian Disputations, p. 49).
"1) nothing exists without having originated, and 2) nothing does originate. From 1) and 2) it follows that nothing exists at all. As a corollary, nothing perishes either" (ibid, 49).
There are, I think, two ways we can look at this kind of nihilism. One way is that nihilism only pertains to the illusory world that we humans are born in and will surely die in insofar as it lacks intrinsic nature (nihsvabhava) which thus makes it all seem meaningless. This is relative nihilism which takes place in the finite world of birth and death. But this world does not pertain to the One Mind (or nirvana) which underlies and transcends the world of birth and death—its very stuff you could say. This is not nihilism or meaningless. Even though the world may seem nihilistic there is a way to escape its consequences.
The second way is to proclaim absolute or universal nihilism which then becomes a kind of nihilistic idealism. Thomas E. Wood describes it this way.
“Thus, despite the strictures against nihilism that were present in the canonical texts themselves, the possibility always lay open of claiming that nihilism was the purest, most rigorous and most consistent form of the Buddhist teachings, while the dharma theory was an inferior and provisional one.”
This is absolute negation or emptiness since everything lacks intrinsic nature. But what does this really mean? That we still perceive things the same way, but everything is empty of intrinsic nature, is not any different than saying everything has an illusory existence. In truth, illusion must appear (a non-appearing illusion is absurd). Perhaps it is more accurate to say that things which are illusory can never be other than projections or configurations of the unborn Mind. The real then, is the underlying source of the illusion which is non-illusory, which is Mind.
Early Buddhism taught that the Five Aggregates were conditioned and illusory which were synonymous with all things (sabbe dhammâ). They were also considered to be empty. The Buddha taught us not to identify with the illusory. It is not our self. Attaining nirvana was (and still is) the real goal. It is realized by the very self (S., praty-âtman) which is non-illusory.