Founded in the period 265-289 A.D., the Temple is situated outside the southern gate of Xi'an city.

The history of this temple can be traced back to the third century, when its original name was Zunshan Temple. During the Sui Dynasty, it was rebuilt and was given its present name.

During the Sui Dynasty, Buddhism prevailed widely in Chang'an (Xi'an City's earlier name). Many Indian monks remained there to translate the sutras and promulgate the Buddhist doctrines. Over time, the Daxingshan Temple became one of three temples especially used for translating sutras. Since then, it gradually became the headquarters of an order with a network of 45 prefectural temples, which were all established by Yang Qian, the founder of the Sui Dynasty.

During the period 716-720 A.D., The Indian monks Na Lian Qi Li Ye She, Zhe Na Jue Duo and Da Me Ji Duo translate Buddhist scriptures and passed on the teachings of the Buddhist Tantra sect here after they came to Chang'an at different times.
Many Indian monks remained there to translate the sutras and promulgate the Buddhist doctrines. Over time, the Daxingshan Temple became the birthplace of China's sutras sect and one of three temples especially used for translating sutras in Chang'an city. The other two are Ci'en Temple and Jianfu Temple.

However, during the Buddhist persecution of 841-845, most of the buildings were destroyed and even ones that survived also disappeared by the end of the Tang. The temple was rebuilt in the Ming and again restored in 1785 by an expert on Tang Dynasty Chang'an called Bi Yuan (1730-97). After its reconstruction in 1956 it was used by a Community of Lamaist monks until the Cultural Revolution (1966-76). Today it houses the Xian Buddhist Association.

The present-day Daxingshan Temple is the result of large-scale restorations in 1955 and 1983. Inside the temple, Qing-style architectural features are predominant, including Mountain Gate, Devajara Hall (Hall of the Heavenly Kings), Great Hall (Daxiong baodian), Bell and Drum Towers, Kwan-yin Palace and many other halls in which Buddhist followers can pray.

As one enters the Mountain Gate, the Bell and Drum towers can be seen on either side. A wood-carved statue from the Song Dynasty stands in the middle of the Devajara Hall, with four Heavenly Kings flanking it. On walking into the Kwan-yin Palace, a sandalwood-made, thousand-hand Kwan-yin statue is sure to surprise you! During some of the Buddhist festivals, the temple is crowded with believers.

Today, the Daxingshan Temple and its surroundings have been developed into a park temple and are open to tourists.