This temple is the center of Taoist activity in Beijing. Its origins date back to the Tang Dynasty, when it was called Temple of the Supreme Ultimate. It became a major Taoist temple after a 13th century master taught, died and was buried here. His disciples renamed the temple White Cloud Temple and the name has stuck. There are still Taoist monks in the temple and they will talk to you. The temple is also the headquarters of the China Taoism Association.

Around finals time, students from all over Beijing come here to offer incense and pray for good grades. This gives new meaning to the temple's name, as there is a large cloud of white incense smoke enveloping the temple grounds during this time.