According to legend, around 366 AD, the Chinese monk Le Zun who was heading to India arrived in Dunhuang. He had a vision of a thousand radiant Buddhas on the cliff face, which made him think that he was on sacred ground and which inspired him to begin excavating the caves. In his fervor, he began digging the first caves along the 1.6 km frontage of the sandstone cliff. Today there are many more than a thousand painted and sculpted Buddhas within the caves. The first of these rock-cut structures were built as sites of Buddhist meditation.

Because the grotto temple is a place for Buddhism activities, which is not much different from other temples. According to Buddhism, monasteries and temples need a clean environment, free from the interference of secular life as much as possible. So the monks chose the top of the cliff in the desert to dig caves for Buddhist meditation practice.

During the reign of the Sui (581-619) and Tang (618-907) dynasties, the construction of caves and works of art continued for lasted a period of ten emperors. As a powerful, wealthy, and respectful Buddhist era， Mogao Caves was then home to 18 monasteries. Having become a major pilgrimage site on the Silk Road, over 1400 monks and nuns as well as countless artists, translators and calligraphers lived here. Wealthy merchants and high dignitaries financed the construction of new caves. The caravans made long detours to come to pray or give thanks for a safe journey in the hostile lands of the west.

After the Mongolian Yuan Dynasty (1271-1368), with the abandonment of the Silk Road, the construction of the Mogao Caves also stopped and gradually disappeared from the world. It was not until the early 20th century that the Mogao Caves were rediscovered by a local Taoist priest.