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The gaiwan originated in the city of Chengdu, in the Sichuan Province of China during the Tang Dynasty (about 1400 years ago.) It was invented by the daughter of a government official for her father. Originally, the saucer part of the gaiwan, known as the "tea boat" in Chinese, was simply a piece of wood. Wax around the edges of its top surface was used to hold a hot cup of tea. The cup was covered by a lid.

Historically, the gaiwan was used as a teacup. Today, it is still used as a cup, but it is also used as a teapot.

When the gaiwan is used as a cup, it is held by holding the saucer in one hand. Some people use two hands to drink; one hand on the saucer, and one hand holding the lid on top slightly ajar. The lid serves to retain heat and the tea leaves.

When used as a teapot, tea is brewed in the gaiwan and then poured into a tea pitcher for serving. The gaiwan is held by placing the thumb and middle finger on opposite sides of the cup. The upper flared lip allows one to hold a cup of hot tea without burning one's fingers. The index finger is used to hold the lid. The lid is held slightly ajar and serves to strain the tea as it is poured.

The gaiwan is good for brewing black or green puer or any tea that requires a lower brewing temperature. The lid can be used to hold tea bags. The wider opening at the top of the gaiwan allows the tea to have more surface area exposure to air, resulting in a better tasting experience. Hundreds of years of refinement have resulted in the ultimate marriage of elegance, form and function.

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