The manufacture of stone tools was one of the most important craft production activities in prehistoric human society. Previously, lack of sound evidence had made it too early to confirm whether or not stone tool production during the Longshan cultural period had already transformed from a primitive self-sufficient household mode of production to a specialized mode of production. Excavation of the site of the Longshan cultural site at Liangchengzhen in Rizhao, Shandong from 1998–2001 through meticulous field methods such as sieving and floatation yielded a large number of lithic reduction tools, ranging from grinding stones, stone hammers, and polishing stones to raw materials, semi-finished products, and lithic debitage of various sizes, resulting from the lithic reduction process. This excavation suggests that the Liangchenzhen site was a settlement site where the complete process of lithic reduction was practiced. Through comparison with contemporary large-scale excavated sites of the Longshan culture, it is suggested that the Area 1 at the Liangchengzhen site was a lithic reduction locality with a relatively high degree of specialization which was used for hundreds of years. It is possible that stone tool production had already advanced to a stage of relatively high specialization during the Longshan cultural period in the Haidai region.