We present a theory of cultural evolution based upon a renormalization group scheme. We consider rational but cognitively limited agents who optimize their decision-making process by iteratively updating and refining the mental representation of their natural and social environment. These representations are built around the most important degrees of freedom of their world. Cultural coherence among agents is defined as the overlap of mental representations and is characterized using an adequate order parameter. As the importance of social interactions increases or agents become more intelligent, we observe and quantify a series of dynamic phase transitions by which cultural coherence advances in the society. A similar phase transition may explain the so-called "cultural explosion" in human evolution some 50,000 years ago.