Lijiang is really two towns. The New Town and the Old Town are divided geographically by Lion Hill. The New Town was developed during the latter part of the 20th century and is a rather uninteresting suburb. The Old Town was founded some 800 years ago and is an architectural gem (although it looks like a huge ink stone, from which image it derived its name--Dayan or Big Ink Stone). The Old Town suffered serious damage in a 1996 earthquake, but is undergoing serious restoration.

With Sifang Street at the core of Dayan, the town spreads out in all directions and is crisscrossed by a labyrinth of streets and alleyways. Most of the dwellings are brick-and-tile structures with carved doors and painted windows. Although Dayan is a compact community, there is always space for a garden. Traffic across the rivers along the street is facilitated by a large number of tiny stone bridges.