According to legend, the Shwedagon Pagoda is 2500 years old. Archaeologists believe the stupa was actually built sometime between the 6th and 10th centuries by the Mon, but this is a very controversial issue because according to the records by Buddhist monks it was built before Lord Buddha died in 486 BC. The story of Shwedagon Pagoda begins with two merchant brothers, Taphussa and Bhallika, from the land of Ramanya, meeting the Lord Gautama Buddha and receiving eight of the Buddha's hairs to be enshrined in Burma. The two brothers made their way to Burma and with the help of the local king, King Okkalapa, found Singuttara Hill, where relics of other Buddhas preceding Gautama Buddha had been enshrined.

The stupa fell into disrepair until the 1300s when the Mon king Binnya U of Bago had the stupa rebuilt to a height of 18 meters (60 ft). It was rebuilt several times and reached its current height of 98 meters (320 ft) in the 15th century. The Mon kingdom possessed two great pagodas of especial sanctity, the Shwemawdaw at Bago and the Shwedagon. Originally only twenty-seven feet high, it was raised to a height of sixty-six feet in 1362 by King Binnya U as an act of special piety. Dhammazedi's immediate predecessor, his mother-in-law Queen Shinsawbu (1453-72), raised its height to 40 meters (129 ft). She terraced the hill on which it stands, paved the top terrace with flagstones, and assigned land and hereditary slaves for its maintenance. When in 1472 she yielded up the throne to Dhammazedi, she retired to Dagon, and during her last illness had her bed placed so that she could rest her dying eyes upon the gilded dome of the sacred fane. The Mon face of the Shwe Dagon inscription catalogues a list of repairs beginning in 1436 and finishing during Dhammazedi's reign. It mentions Queen Shinsawbu under a terrific Pali name of sixty-six letters. By the beginning of the sixteenth century the pagoda had become the most famous place of pilgrimage in Burma.