Baisha Ancient Town is one of the oldest zones in the city of Lijiang. It got its name of “Baisha,” meaning “white sand,” from the typical natural white sand in the area. Baisha was the cradle of the Tusi Dynasty which evolved from the Mu clan, and was also the earliest settlement of the Naxi people. To be found today are many ancient constructions that were originally built during the Ming Dynasty (1368-1644), for example, Dabaoji Palace, Liuli Temple, and Wenchang Palace. The well-known Baisha Frescoes can be seen in Dabaoji Palace.

As mentioned earlier, Baisha Ancient Town was the cradle of the ancient Mu clan. The Mu family was famous for their exceptional city planning skills and experience. Early in the Tang Dynasty (618-907), the emperor of the Nanzhao state named Yulong Snow Mountain “North-Yue,” meanwhile the ancestors of the Mu clan began to build North-Yue Temple and the town’s streets. These constructions were examples of the golden age of Baisha. Later in the Song Dynasty (960-1279), the town prospered further and became the economic, political, and cultural center of the city of Lijiang.

The town’s central district is characterized by clusters of temples called "Mudu," as well as a huge square symbolizing the political power and influence of the Mu clan at the time. Among the remaining ancient architectures that can be found today, Fuguo Temple, Dabaoji Palace, Liuli Palace, and Dading Pavilion were all built during the reign of the Tusi offspring of the Mu clan. Around that same time, the Mu began to channel water from Yulong Snow Mountain into the town for irrigation purposes and water supply, which could be considered one of the earliest examples of irrigation engineering works in China. Then throughout the Ming (1268-1644) and Qing (1644-1912) Dynasties, the Mu family gradually migrated to the town of Dayan.

Baisha Ancient Town’s architectural complex is made of 2 parts: the folk residence zone, and the cultural sites. The folk residence area is called "Peng Shi Zhi" in the local language, meaning the "White Sand Streets," And all the streets were constructed oriented from north to south. In the town center, there is a square where 3 main avenues intersect. Houses and small stores line up on both sides of the streets, and a crystal-clear brook meanders around all the homes, cutting through the small town from north to south.

At the end of Baisha Old Street, there is a huge cluster of temples that were built in the Yongle era (1402-1424) of the Ming Dynasty. It consists of 3 yards: Sutra Collection Pavilion which is the dooryard, Liuli Temple which is the cloisters, and Dabaoji Palace which is the backyard. The palace occupies an area of about 73 square meters. Among the 28 fresco groups in the palace, with the painting of Sakyamuni explaining the sutra passages to his disciples is the most famous and valuable one. The frescos were created by Han artists in collaboration with Tibetan artists.