Under the Jurchen Jin dynasty, the city served as their empire's eastern capital under the name Dongjing (東京).

The city was the site of widespread labor protests in March 2002 that were sparked by the bankruptcy and subsequent liquidation of the Liaoyang Ferroalloy Factory, or Liaotie.

The protesters were workers from at least seven different factories, including failing textile, chemical, piston, instruments, leather, and precision tool plants.

Their grievances involved local government corruption and widespread worker layoffs coupled with arrearage in employee wages, pensions and unemployment benefits.

The activists demanded compensation for what they were owed, an investigation into the bankruptcy of Liaotie, and the resignation of the chairman of the local legislature, Gong Shangwu.

The government also responded by paying most but not all of the money that the workers were owed, and by ordering an investigation into the charges of corruption at Liaotie which culminated in the arrest and thirteen-year prison sentence of its manager, Fan Yicheng, for smuggling and fraudulent dereliction of duty.

The provincial governor who approved the Liaotie bankruptcy was also imprisoned for accepting bribes, but Gong Shangwu evaded punitive action.

Guangyou temple beside the Baita (White Pagoda) has become one of Liaoyang's main tourism attraction in recent years.

There are two small museums for famous Liaoyang residents: Cao Xueqin, author of the book Dreams of a Red Mansion, and Wang Erlie, a notable Qing dynasty official.

Gongchangling County, just east of the main city is noted for its hot spring resort, golf course and ski centre.