The Liao Dynasty was a regime founded by an ethnic minority called the Qidan who lived in the northeast areas of China. In 916, a Qidan man named Yelu Abaoji established the Qidan Kingdom. Initially, the kingdom was under the slavery system. Till 947, the title of the kingdom was officially changed into Liao, with Balin Left Banner (in current Inner Mongolia) as its capital city. The territory of the Liao Dynasty mainly covered the northern part of China, with the estuary of the Amur River in the northeast, the middle part of Mongolia in the northwest, Tianjin and Hebei Province in the south.

Under the influence of the traditional nomadic living habits and Han people's life pattern, modes of production of the Liao Dynasty were various. Their production methods included not only traditional agriculture and animal husbandry but also hunting and fishery. Still, influenced by the advanced techniques of the Han people, the Liao's industries such as textile, mining, ceramics, construction and harness making developed well. Meanwhile, trade between Liao and its neighbor countries were frequent and developed rapidly. From the Five Dynasty and Ten States Period (907 - 960), Liao began to make business with the Latter Liang (907 - 923), the Latter Tang (923 - 936) and the Latter Jin (936 - 946). Through sea transportation, Liao also exchanged goods with the Northern Tang (937 - 975) and Wu Yue (907 - 978) in the southern areas. After the founding of the Song Dynasty (960 - 1279), the Liao mainly exchanged their horses, sheep and pearls for Song tea, silk fabric, porcelain and lacquer ware.

Politically, the Liao Dynasty had its own particular governing system and policies. On the one hand, different social systems were adopted in different regions. In the northern areas, which were the original living place of the Qidan people, the slavery system was adopted; in the eastern regions near the Bohai Sea and the southern 'Sixteen Prefectures of Yanyun', the feudal system was adopted. The so-called 'Sixteen Prefectures of Yanyun' area was the reward bestowed by the Liao Dynasty for helping Shi Jingtang (the founder of the Latter Jin) to defeat the Latter Tang in the Five Dynasties and Ten States period. On the other hand, a special management system in the court - the North and South Official System -- was established by the Liao Dynasty. The system regulated that officials in the north side in the court dealt with Qidan people's political affairs while officials in the southern side took charge of those of the Han people. In addition, different laws governed Qidan and Han people.

The culture of the Qidan People of the Liao Dynasty was deeply affected by that of the Han people. Most rulers of the Liao adored Han culture. They liked to read the Analects of Confucius and Zhen Guan Zheng Yao written by Emperor Taizong of the Tang Dynasty (618 - 907). Especially, Yelv Abaoji, the first emperor of Liao worshiped Confucius and established an imperial academy called Guozijian to impart Confucianism. Under the enlightenment of Han culture, the Liao people created their unique characters - the Qidan language. In that period, the official language of the Liao Dynasty was the Qidan language and Chinese language. As for religion, Qidan people originally worshiped nature and primitive civilization. Since Emperor Taizu, Yelv Abaoji's reign, Chinese Buddhism gradually spread to the Liao Dynasty. Many Buddhist sutras were translated into the Qidan language and were carved on stone tablets. One of the four Buddhist holy mountains - Wutaishan Mountain (in current Shanxi Province), was a Buddhism teaching center of the Liao Dynasty.

The Qidan were a warlike people. Rulers of Liao attacked the Northern Song Dynasty many times, coveting Song territory in the central plain areas. However, due to the evenly matched military forces between Liao and Song, Liao did not finally realize its ambition. In 1005, Liao and Song signed the notable Tanyuan Treaty in Tanzhou (currently Puyang in Henan Province). After that, Liao kept a friendly relationship with Song for almost 120 years during which time the Liao society became more and more prosperous. The Liao Dynasty began to decline later because of the incompetence and tyranny of later rulers. In 1120, Song made an alliance with the newly founded Jin Dynasty and attacked the Liao Regime. Finally in 1125, the last emperor of Liao, Emperor Tianzuo, was captured by the Jin army ending the Liao Dynasty.