It was established by the decree of the President of Azerbaijan Ilham Aliyev, on an area of 115,900 hectares (1,159 km2) in the Quba , Qusar, İsmayıllı, Qabala, Oguz and Shamakhı administrative districts on December 8, 2006. It was enlarged by presidential decree on July 8, 2010 from 115,900 hectares (1,159 km2) to 130,508.1 hectares (1,305.081 km2).

It is located in northern Azerbaijan, close to the border with Russia at the Greater Caucasus Mountains. Mount Bazardüzü, the highest mountain of Azerbaijan is located in Shadag National Park. The Shahdag National Park is the largest national park not only Azerbaijan but in the whole Caucasus.

The World Bank has allocated a $17 million loan and $8 million grant for the national park's creation, while the government of Japan has provided $8 million as a grant for the project implementation. The Shakhdag National Park will help address ecological issues and build a tourist infrastructure in the Caucasus for visitors.