Taierzhuang sits at the midpoint of the Beijing-Hangzhou Grand Canal, at the junction of Shandong and Jiangsu provinces. The town's fortunes rose and fell with the canal's traffic. During the Tang dynasty, the Tai family established a village here called Taijiazhuang. By the Ming dynasty's Wanli period, when the Grand Canal was diverted to avoid the unpredictable Yellow River and routed through Taierzhuang, the settlement became a critical waypoint on the most important commercial waterway in China. Emperor Qianlong of the Qing dynasty named it the "No. 1 Town in the World." At its peak, two-thousand-ton ships navigated through, and the canal traffic connected Taierzhuang directly to Yangzhou, Nanjing, Shanghai, and Hangzhou.

The fortification of Taierzhuang began in 1647, the fourth year of the Qing dynasty's Shunzhi Emperor. Built beside the canal, the walled city stretched 1.1 kilometers east to west and one kilometer north to south. Six gates pierced the walls: Yangsheng to the east, Taicheng Jiuzhi to the west, Zhongzheng to the north, and Huidiji to the south, plus two smaller gates. Each main gate held a two-story gatehouse about seven meters high, with a guardhouse on top and a passage below wide enough for large vehicles. A moat ran nine meters from the wall, ten meters wide and two meters deep, encircling the town for 5.7 kilometers. In 1857, the earthen walls were rebuilt in brick, with battlements on top and adobe fill nearly three meters thick. The town inside these walls housed eight architectural styles, from northern courtyards to southern Fujian designs, Hui-style buildings to European structures brought by foreign traders on the canal.

In the spring of 1938, during the Second Sino-Japanese War, Chinese Nationalist forces under General Li Zongren made a stand at Taierzhuang against the advancing Japanese army. The Battle of Taierzhuang, fought from late March to early April, was the first major Chinese victory of the war and a significant morale boost for the Nationalist cause. But the cost to the town was total. The fighting destroyed virtually every structure within the walls. The ancient docks, the temples, the courtyard houses, the gatehouses that had stood for nearly three centuries, all were reduced to ruins. For the next seventy years, Taierzhuang existed more as a symbol of wartime sacrifice than as a living town.

The reconstruction announced on April 8, 2008, the 70th anniversary of the battle's victory, was an act of cultural restoration on a massive scale. The rebuilt ancient town covers two square kilometers, with 11 functional divisions and 29 scenic spots. The Taierzhuang Battle Memorial Hall anchors the site's wartime history, while the restored canal infrastructure, ancient docks, and reconstructed buildings from eight architectural traditions recreate the town's commercial past. The Zhunti Pavilion, originally built in the middle to late Tang dynasty and the oldest traceable building in Taierzhuang's history, has been rebuilt near its original location. Today the Grand Canal still runs through the district for 42 kilometers, and the reconstructed town draws visitors who come to see what was lost, what was remembered, and what human determination chose to rebuild.