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The area has been under almost constant regeneration since the late 20th century as part of a city-wide project of economic regrowth. It currently houses many bars and clubs popular with both expatriates and locals as well as international brand-name stores such as American Apparel, Apple Inc. and Adidas. It is notable for housing the largest Adidas store in the world. In recent years, the Sanlitun Village shopping mall has become a popular destination for both expatriates and young Chinese.
Prior to 1949, the Beijing Legation Quarter was the center of diplomatic activity in the capital. After the foundation of the People's Republic of China, the government wanted to move the diplomatic district outside the inner city. Sanlitun was chosen as the area where foreign legations and embassies to be reallocated in the late 1950s. The area was called Sanlitun to designate its location from Dongzhimen gate (东直门). With tun means 'locality', san li means 'three li' (a li is 0.5 km), the name is translated as 1.5 km away (from Dongzhimen Gate).
Sanlitun began to grow when, along with the economic reforms of the late 1970s and early 1980s, bars serving expatriates and later locals began to open. International hotels introduced the first bars, but in the 1990s, standalone establishments appeared. Accounts differ over which was the first bar in Sanlitun, with one author crediting the Cat Cafe in 1995 while another names Frank's Place, which opened in 1990. 
A small lane known as Nan Jie was demolished in the summer of 2005 to make way for new buildings. However, bars and restaurants continue to operate on both sides of Gongti Bei Lu.
The Village and Nali Mall shopping areas opened in the summer 2008, giving the area many new shops, restaurants, bars and a multiplex cinema.
Sanlitun saw significant new construction as part of preparations for the 2008 Summer Olympics.  In April 2008, as part of an ongoing operation to clean up the city, a major drug bust occurred in Sanlitun and many arrests were made.  A total of four bars and clubs were effectively closed, including a notorious bar known as Pure Girl for its cheap alcohol and availability of drugs, both its bartender and manager were executed for distribution of drugs. However, it has since reopened a year later with new management. The police operation was widely criticized for its violence and absence of proper due process. A number of drug dealers as well as a barman are believed to have received the death penalty as a result of this operation.
Sanlitun has become one of the most popular places in Beijing, especially for its nightlife, and attracts many foreign tourists. More than 40% of the bars in Beijing are located at Sanlitun area.
The Uniqlo in Sanlitun gained international attention after it was the site of a July 2015 sex-tape that was filmed inside one of the store's dressing rooms. Uniqlo denied any involvement in the video. 
In an August 2015 incident near the Uniqlo, a Chinese woman was killed and her French husband was wounded in an attack by a sword-wielding man.
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International schools in Sanlitun include:
- "Sanlitun". Basic Beijing. Retrieved 2 July 2012.
- "Daylight Killing Brings Beijing District of Sanlitun Under Scrutiny". The New York Times. 14 Aug 2015.
- "My parents cannot imagine my life, but they let me choose the way I live". The Guardian. 9 Aug 2007.
- Beijing police raid popular bar district for drugs
- "Uniqlo sex video: film shot in Beijing store goes viral and angers government". TheGuardian. 16 July 2015.
- "Beijing Police Detain at Least 4 Over Uniqlo Sex Video". The New York Times. 20 July 2015.
- "Contact Us." Pakistan Embassy College Beijing. Retrieved on September 16, 2015. " Pakistan Embassy College Beijing Embassy of Pakistan Compound No. 1, Dong Zhi Men Wai Da Jie, Sanlitun, Chaoyang Distt. Beijing 100600, CHINA."
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