The history of Guyuan spans more than two millennia and is closely intertwined with the development of the Great Silk Road. The city was founded during the Western Han Dynasty (206 BC – 24 AD) as an important military and administrative centre on the north-western borders of ancient China. Initially, it was established to strengthen defence and control over strategically important territories.
A key factor in the city's formation was its unique geographical position. Located on the northern section of the Silk Road, Guyuan served as a vital hub connecting the central plains with the western regions. Trade caravans passed through here, contributing to its economic prosperity and transforming it into a significant centre of commerce and logistics. Over the centuries, the city maintained its strategic importance, serving as a crucial outpost for many Chinese dynasties.
Guyuan's early economy was based on trade and agriculture. The city was known as a place where silk, tea, and other goods were exchanged for horses and livestock products from nomadic peoples. Thanks to its position at the crossroads of civilisations, Guyuan became a melting pot of cultures. There was active interaction between the Han people and other ethnic groups here, as well as the spread of ideas and religions, primarily Buddhism. Evidence of this rich cultural heritage can be found in numerous archaeological discoveries and historical monuments in the city's vicinity, such as the famous Xumishan Grottoes.