The PLAN began designing a warship armed with guided missiles in 1960 based on the Soviet Neustrashimy, with features from the Kotlin-class destroyer, but the Sino-Soviet split stopped work. Work resumed in 1965^[1] with nine ships being ordered.^[2][1] Construction started in 1968, with trials beginning in 1971. The ships nominally entered service in the early 1970s, but few were fully operational before 1985; workmanship was poor due to the Cultural Revolution.^[1]

Construction of the second batch began in 1977,^[3] with the last commissioning in 1991.^[4] The second batch may have been ordered due to the Cultural Revolution disrupting development of a successor class.^[1] These ships may be designated Type 051D.^[3] The PLAN initiated an abortive modernization program for the first batch in 1982. The ships would be reconstructed with British weapons and sensors acquired from British Aerospace. The Falklands War made the prospective upgrades less impressive and cost effective, and the project was cancelled in 1984. A 1986 upgrade project using American power plants, weapons, sensors, and computers was cancelled because of the 1989 Tiananmen Square protests.^[1]

Dalian was launched on 20 August 1981 at the Huangpu Shipyard in Shanghai. Commissioned on 26 December 1984 into the North Sea Fleet.

Dalian initially received the Thomson-CSF Tavitac combat data system, the Type 393 surface search radar, and HQ-7 (Crotale derivative) surface-to-air missiles (SAM); the missiles replaced "X" turret. In 1999, YJ-8 missiles replaced the HY-series, and electronic warfare systems were upgraded.^[4] She was later equipped with YJ-83 anti-ship missiles. She was equipped with ZKJ-1 combat data system.^[5][4]

On 11 July 2017, Dalian conducted a live firing exercise in the Yellow Sea.

She was decommissioned on 16 May 2019.

On 1 September 2020, Dalian arrived at the Liugong Island Ferry Terminal in Weihai, to be permanently anchored and converted into a museum ship.