Zhiyuan was born from indecision. In 1885, Viceroy Li Hongzhang traveled to Europe to purchase warships for the Chinese navy, torn between armored cruisers and the newer protected cruiser design. Unable to choose, he ordered two of each. The protected cruiser contract went to Armstrong Whitworth in Elswick, England, then the world's leading builder of the type. Zhiyuan was laid down on 20 October 1885, launched on 29 September 1886, and completed on 23 July 1887. At 268 feet long with a displacement of 2,300 tons, she carried three 8-inch Krupp breech-loading guns, two 6-inch Armstrong guns, an array of lighter weapons including six Gatling guns, and four torpedo tubes. Her compound-expansion steam engine drove two screws at a top speed of 18.5 knots. The ship was equipped with electrical systems throughout, including electric ammunition hoists and electrically activated torpedo tubes.

In August 1887, Zhiyuan and her sister ship gathered in the Solent near Portsmouth along with two armored cruisers and a torpedo boat, forming a squadron bound for China. Admiral William M. Lang, a British officer in Chinese service, took command for the passage east. The ships were crewed almost entirely by Chinese sailors. After an inspection by Li Hongzhang and some last-minute repairs following a lost anchor, the squadron departed on 12 September, arriving in Amoy (now Xiamen) in November. The ships joined the Beiyang Fleet in Shanghai the following spring. In 1888, Zhiyuan was repainted from her English all-grey scheme to the Victorian-era combination of a black hull, white above the waterline, and buff-colored funnels. Under Captain Deng Shichang, she participated in a 1889 flotilla visit to Vladivostok and ports across Korea.

At the Battle of the Yalu River, Zhiyuan was paired with her sister ship in the Chinese formation. When Admiral Ding Ruchang's signaling mast aboard the flagship Dingyuan was destroyed by the concussion of its own guns, the entire fleet lost central coordination and fought in these pairs. By early afternoon, Zhiyuan was engaged with the Japanese corvette Hiei. As the hours wore on, Admiral Tsuboi Kozo's flying squadron of fast cruisers turned their attention to Zhiyuan and her sister. The Japanese vessels circled the slower Chinese pair, pouring in fire from their quick-firing guns. Zhiyuan began taking on water through holes in her hull and developed a list. Rather than strike his colors, Captain Deng ordered the ram. The ship surged forward, closing on a Japanese cruiser. She never arrived.

Deng Shichang's sacrifice entered Chinese national mythology. The 1962 film Naval Battle of 1894, produced by Changchun Film Studio, culminated in Zhiyuan's charge, ending with waves crashing against rocks and Deng's face superimposed on the sea. The 2003 television series Towards the Republic portrayed Deng as a strict but honorable captain. The PLA Navy named a training ship Shichang in his honor. In 2014, China invested 37 million yuan to construct a full-scale replica of Zhiyuan at the Port of Dandong, near the mouth of the Yalu River where the original went down. The replica serves as a floating museum. Meanwhile, after a 16-year search beginning in 1997, the wreck of the original Zhiyuan was discovered in 2013. Over 100 artifacts have been recovered, including weapons, ship components, and personal items. During the excavation, the remains of seven crew members were found, sailors who had gone down with the ship more than a century before.