The Huaqing Hot Springs is located about 35 kilometers east of the city of Xi'an. Historically, during the Western Zhou Dynasty the construction of the Li Palace was undertaken on this spot. In the Qin Dynasty, a stone pool was built and was given the name Lishan Hot Springs. The site was enlarged into a bigger palace during the Han Dynasty, and was renamed, the Li Palace. During the Tang Dynasty, Emperor Taizong ordered the construction of the Hot Springs Palace. Emperor Xuanzong had a walled palace built around the Lishan Mountain in the year 747. It was known as the Huaqing Palace. It also had the name Huaqing Hot Springs because of its location over the hot springs. Huaqing Hot Springs is located at the foot of the Lishan Mountain, a branch of the Qinling Range. Standing 1,256 meters high, it is covered with pines and cypress and looks very much like a dark green galloping horse from a long distance away. In ancient times, a black horse was called "Li", and this is how it got its name, Lishan.

The Tang Emperor, Xuanzong used to spend his wintertime in company with his favorite concubine Yang here. Yang, who was recognized as one of the most enchanting ladies in ancient China, was spoiled by the Emperor. He cavorted with the beautiful lady all day and night and didn't deal with the state affair anymore. He built the luxurious palaces in this area for their personal pleasure and didn't deal the state affair anymore. Emperor Xuanzong's misbehavior finally resulted in the An Lushan Rebellion which deteriorated his regime and destroyed some of the palaces built in this site.