Xiaolongnü, named "Little Dragon Maiden" for her birth year in the Chinese zodiac's Year of the Dragon, was abandoned as an infant outside Chongyang Palace. Her cries drew Quanzhen priests, but a middle-aged woman called Granny Sun took her first to the nearby Ancient Tomb. Her true name remains unknown.

Raised within the Ancient Tomb Sect by an unnamed apprentice of founder Lin Chaoying, Xiaolongnü mastered the sect's martial arts as a child, including the Jade Maiden Heart Sutra, Jade Maiden Swordplay, Fist of Beauties, and Palm of Infinity Web. Her grasp of the highest techniques was limited due to her master's incomplete knowledge. At fourteen, she inherited sect leadership after her master's death, living secluded with Granny Sun. Her expelled senior disciple Li Mochou later spread false rumors that Xiaolongnü would marry any man who defeated her at sixteen, attracting unwanted suitors like Mongol prince Huodu.

Her life shifted when orphan Yang Guo, fleeing Quanzhen Sect bullies, entered the Ancient Tomb. Xiaolongnü initially refused him shelter, sending him back with Granny Sun. When Quanzhen priests insulted Yang Guo and mortally wounded Granny Sun in the conflict, Xiaolongnü intervened. She defeated the assailant Hao Datong and honored Granny Sun's dying wish by taking Yang Guo under her protection. Accepting him as her apprentice, they lived together in the tomb for years. Xiaolongnü taught him most of her martial arts, though Yang Guo called her "Aunt." Their relationship evolved into a romantic bond, considered taboo in their Confucian society due to the master-apprentice dynamic.

Their romance faced repeated tribulations, including separations driven by societal pressures and manipulations like Huang Rong's warnings about the taboo. A pivotal moment occurred when Taoist Yin Zhiping sexually violated Xiaolongnü. Believing Yang Guo would reject her for losing her purity, she accepted a marriage proposal from Gongsun Zhi of Passionless Valley, abandoning it after Yang Guo's reappearance. Later, believing her poisoned wound incurable, Xiaolongnü plunged from a cliff to compel Yang Guo to live without her, leaving a message promising reunion in sixteen years. She survived in seclusion, healing through jade bee honey and environmental resources, until their eventual reunion and marriage at Chongyang Palace.

Xiaolongnü expanded her martial prowess beyond her sect. She acquired the Technique of Ambidexterity from Zhou Botong, enabling simultaneous use of divergent skills, and learned techniques from the Nine Yin Manual. Her signature equipment included white-silver gloves impervious to weapons, a long sash with gold bells for attacking acupuncture points, and gold needles coated with jade bee venom. The jade bees, living weapons, obeyed her commands via instruments like the guqin or rhythmic whistles, attacking in formations and providing venom for needles and healing honey.

Characterized by emotional detachment and innocence from isolation, Xiaolongnü initially viewed life and death with indifference and spoke bluntly. Her naivete made her susceptible to manipulation, as when Huang Rong exploited her unfamiliarity with societal norms. However, her love for Yang Guo catalyzed gradual emotional growth, softening her cold demeanor without erasing her core loyalty and moral consistency. She defied conventions for their relationship and prioritized Yang Guo's well-being at personal cost.

Later, Xiaolongnü and Yang Guo retreated to the Ancient Tomb, emerging occasionally to aid in conflicts like the Battle of Xiangyang. Their legacy included a descendant, the Yellow Dress Maiden, and their influence persisted through figures like Guo Xiang, who founded the Emei Sect.