The cemetery was established in the period 1915-1918 on the southern slope of the Pustki Hill, on a trapezium-like plan. It covers an area of approx. 2.92 hectares. On the southern side, it is surrounded by a wall base and stone poles connected with a wooden fence with railings.

A two-wing gate with wooden railings composed into sections of a stone wall going down in faults inside the cemetery leads visitors inside the site. On both sides of the entrance, there are massive stone poles surmounted by geometrical representations of a hoplite's helmet.

A wooden chapel of a height of approx. 25 m, covered with a shingle hip roof with a Latin cross at the top, laid on a stone terrace with a balustrade, is the main element of the cemetery. It was built in the highest location at the cemetery and is a distinct predominant feature of the entire complex.

The cemetery is composed of several dozen groups of graves with separate gravestones connected together by lanes. Separate sections were created, considering the affinity of soldiers to different armies or individual army formations. The cemetery composition is supplemented by four viewing platforms closed with stone balustrades. Wide stone stairs lead to the chapel from the terrace with the balustrade topped with a wooden cross, located in the middle of the highest-located part of the cemetery.
On both sides of stone stairs, as close to the chapel as possible, there is a “Hungarian” section (graves no. 1-102) with gravestones with a motif of equal-armed crosses and the crown of St. Stephen.

Below the “Hungarian” section, there are groups of graves of soldiers from the 56th Wadowice Infantry Regiment (graves no. 172-272) and the 57th Tarnów Infantry Regiment (graves no. 103-171). The main elements of these sections are gravestones with bevelled top corners surmounted by Greek crosses. The following inscription is preserved on the gravestone of the 57th Infantry Regiment: “HIER RUHEN/ IN FRIEDEN 96 ÖSTERR.UNG KRIEGER/ DES I.R. No 57”. Next to the section of graves of the soldiers from the regiment, there is a wooden memorial dating back to 1995. It is set on a stone pedestal with a plaque with an inscription in Polish and in Hungarian which reads: “IN MEMORY OF HUNGARIAN HEROES/SOLDIERS KILLED IN BATTLE DURING THE FIRST/ WORLD WAR/ HUNGARIAN ARMY.”

To the west of the section of the 56th Infantry Regiment, there are the sections of the 33rd and 34th National Defence Regiments with gravestones surmounted by Greek crosses.
Along the lane which crosses the cemetery and the middle viewing platform, the following sections can be encountered if one goes from the west to the east:
• the 100th Cieszyn Infantry Regiment (graves no. 289-445) with a gravestone in the form of a truncated pyramid crowned with Greek crosses,
• the 20th Nowy Sącz Infantry Regiment (graves no. 311-380) with a gravestone in the form of a prism narrowing upwards and with a viewing platform with a balustrade,
• section of killed soldiers from different regiments (graves no. 446-471),
• western officers' section (graves no. 472-475),
• eastern officers' section (graves no. 476-478) closed with a terrace with a balustrade.
On three of the last sections mentioned, there are triangular-shaped stones and concrete blocks.
Below, the following sections can be found:
• sections of Russian army soldiers with a gravestone in the shape of a massive two-barred cross with rounded arm ends (graves no. 758-775, 795-857, 858-875),
• section of German army soldiers with a gravestone in the shape of a sarcophagus with the inscription: “HIER RUHEN IN FRIEDEN 65 DEUTSCHE KRIEGER” (graves no. 693-736, 737-757),
• section of artillery (graves no. 479-485) with a plaque with the inscription “ZUM EWIGEN GEDENKNIS 7 ÖSTERR-UNG. ARTILLERISTEN”, sappers (graves no. 486-489), unknown soldiers of the Austro-Hungarian army (graves no. 490-523) with triangular gravestones and concrete blocks,
• section of Austro-Hungarian soldiers with a gravestone in the form of a truncated pyramid surmounted by Greek crosses with the inscription: “HIER RUHEN 85 ÖSTERR. KRIEGER” (graves no. 524-692),

Graves are surrounded by crushed rock gravel. At the heads of the graves, there are wooden crosses (Latin or two-barred ones) with a gable roof. The tomb of Michał Stępień from the 20th Infantry Regiment is of non-standard form. It is encircled by a concrete frame and covered by a gravestone with an inscription.

Russian troops had their positions in the Pustki Hill in the spring of 1915. At 10 a.m. on 2 May 1915, after four hours of shell-firing, Austro-Hungarian troops of the 12th Infantry Regiment marched in the assault on the hill. The first resistance lines were broken without greater struggle. Fierce fights that brought considerable losses to both sides occurred in the part of the hill covered with forests. Forests were finally conquered by the troops of the 56th Wadowice Infantry Regiment and the 100th Cieszyn Infantry Regiment. The breaking through Russian positions on the Pustki Hill was one of the most important events of the Battle of Gorlice.

After the Russian army was ousted from West Galicia, Austrian military authorities faced a task to put battlefields in order and bury dead soldiers with all due respect. The keeping of records of the buried bodies, exhumations and establishment of cemeteries in the former West Galicia was the responsibility of the Branch of War Graves with the Imperial and Royal Military Command which was created towards the end of 1915.

War cemetery no. 123 was established near the Pustki Hill battlefields. Initially, Jan Szczepkowski, Polish sculptor and architect, was in charge of design works. In 1917, his duties were taken over by Dušan Jurkovič of Slovakia. He designed, among other things, the central element of the cemetery – the wooden chapel.

Bodies of 1204 soldiers who were killed in battle or died due to other causes were buried there, including 912 from the Austro-Hungarian army, 65 from the German and 227 from the Russian army. The bodies resting in the cemetery were representatives of different nationalities, including Germans, Austrians, Hungarians, Czechs, Russians, Slovaks and many Poles (from the 56th Wadowice Infantry Regiment, 57th Tarnów Infantry Regiment, 20th Nowy Sącz Infantry Regiment, 100th Cieszyn Infantry Regiment).

A chapel was destroyed in the fire of 1985. It was reconstructed thanks to funding under the project co-financed with EU funds as part of the Małopolska Regional Operational Programme 2007-2013 realised by Łużna Municipality. In the second half of 2013, design was undertaken. The official opening and consecration of the church took place on 18 October 2014.

Simultaneously with the reconstruction of the chapel, various renovation works were carried out, which included all cemetery elements along with the restoration of the historic arrangement of graves and paths. Gravestones and fence elements underwent conservation. Wooden fence elements along with the gate and wooden grave crosses were reconstructed. New enamelled plaques with information on the buried person were made and installed on crosses.

European Heritage Label was awarded to war cemetery no. 123 Łużna-Pustki by way of decision of the European Commission of 2 February 2016.

• Archiwum Narodowe w Krakowie [National Archives in Krakow], zespół Wojskowy Urząd Opieki nad grobami wojennymi Okręgu Korpusu nr V w Krakowie [Military Office of the Conservation of War Graves of the Division of Corps No. V in Krakow], ref. no. GW 40, GW 61, GW 83.
• R. Broch, H. Hauptmann, Zachodniogalicyjskie groby bohaterów z lat wojny światowej 1914 – 1915 [West Galician Graves of Heroes of WWI 1914 - 1915], translated into Polish by H. Sznytka, Tarnów 1996, pp. 178-180.
• O. Duda, Cmentarze I wojny światowej w Galicji Zachodniej [World War I Cemeteries in West Galicia], Warszawa 1995, pp. 193-196.
• J. Drogomir, Polegli w Galicji Zachodniej 1914-1915 (1918) [Soldiers Killed in West Galicia 1914-1915 (1918)], Vol. 1, Tarnów 1999, pp. 583-589
• R. Frodyma, Cmentarze wojskowe z okresu I wojny światowej w rejonie Beskidu Niskiego i Pogórza [World War I Cemeteries in the Areas of the Low Beskids and Pogórze], Warszawa 1985, pp. 114-116.
• F. Latinik, Żołnierz polski pod Gorlicami 1915: działalność 100 Pułku Ziemi Cieszyńskiej [Polish Soldiers in the 1915 Battle of Gorlice: Activity of the 100th Regimen of the Cieszyn Land], Przemyśl 1923.