The city is located near the historic junction of the northern and southern Silk Roads, and was therefore a town of military importance.
For centuries Buddhist monks at Dunhuang collected scriptures from the west, and many pilgrims traveled through the area, painting murals inside the Mogao Caves or "Caves of a Thousand Buddhas." A small number of Christian artifacts have also been found in the caves (see Jesus Sutras), testimony to the wide variety of people who made their way along the Silk Road. Today, the site is an important tourist attraction and the subject of an ongoing archaeological project. A large number of manuscripts and artefacts retrieved at Dunhuang have been digitized and made publicly available via the International Dunhuang Project.

Public art in Dunhuang
The Mingsha Shan dune overlooking Dunhuang Rocked by waves of invasion, Dunhuang has previously been independent, as well as being ruled by both China and Tibet.

Dunhuang was made a prefecture in 117 BC by Emperor Han Wudi, and was a major point of interchange between China and the outside world during the Han and Tang dynasties.

Dunhuang's city centre is relatively highly developed, including much commercial activity and many hotels. Bookshops and other souvenir shops sell materials relating to the Caves and the history of the region. A night market is held in the city centre, popular with tourists. Many souvenir items are sold, including such typical items as jade, jewelry, scrolls, hangings, small sculptures, and the like. A sizable number of members of China's ethnic minorities engage in business at these markets. A Central Asian dessert or sweet is also sold, consisting of a large, sweet confection made with nuts and dried fruit, sliced into the portion desired by the customer.