Dali Ancient City was set up in 1383 in the Ming Dynasty. it has a history of more than 600 years. When the city was first set up, it was entirely enclosed by the city walls on four sides and each side had a gate. Over the years, the walls on the east and west sides were destroyed. Only the walls on the south and the north were destroyed. in 1983, the local government renovated the wall and the gate tower. On the tower, four Chinese characters are quite striking, meaning "Literary State". inside the gate, an old street, running from south to north, connects the south gate with the north gate.

This ancient city was once a vital communications hub where the population was dense. Many trade caravans gathered here and the markets were prosperous. On both sides of the street, there were numerous shops, inns, tea houses and restaurants, very bustling and exciting. The local government has given high priority to its preservation. So Dali Ancient City still remains its original looks. Now, the shops here mainly sell some locally-made handicraft articles: marble products, straw weaving wares, embroideries, wax printing clothes and other ornaments. Small retailers also sell some antiques, ancient paintings, old coins and silver wares.