Construction on this stone and brick pagoda began in the year 1001 AD during the reign of Emperor Zhenzong of Song, and was completed in 1055 AD during the reign of Emperor Renzong of Song. Although Emperor Zhenzong intended to have Buddhist gathered by the Chinese monk Huineng from India stored at the pagoda's site, the pagoda served another important function besides religious. Due to its building at a strategic military location, the height of the pagoda made it pristine as a watchtower, which could be used to spot enemy movements coming from the northern Liao Dynasty headed by China's Khitan rivals.
Another pagoda of similar height and design is the Chongwen Pagoda of Shaanxi Province. Completed in 1605 during the Ming Dynasty, this pagoda stands at a height of 79 m , making it the second tallest pagoda built in pre-modern China.
Each floor of the Liaodi Pagoda features gradually-tiered stone eaves, doors and windows while the first floor has an encircling balcony. A split section of the pagoda's walls are open so that the tower's interior may be viewed, along with the actual thickness of the walls. At the top of its steeple, the pagoda features a crowning spire made of bronze and iron. In the interior a large staircase with landings for each floor winds from the bottom all the way up to the top floor. Brick brackets are used to support the landings on each floor, while from the eighth story up there is no brackets supporting the vaulted ceiling. Within the pagoda is a large pillar in the shape of another pagoda, as seen from the inside and as viewed from the cut section. The sinologist and architectural author Nancy Steinhardt features a picture and caption for this in her book ''Liao Architecture''. The painted murals and stone steles with Chinese calligraphy in the pagoda are dated to the Song period when the pagoda was built.