Located about 80km northeast of Ulaanbataar, Terelj National Park is truly a geological wonder. Nowhere in the world will you find rock formations that have the same effect as looking into the clouds. There are elephants, turtles, and old men reading books...many formations are obvious, however, many more can be made up if you have a good imagination. The most popular formation is Turtle Rock.
Terelj also offers some good backpacking, horse-back riding, and camping. Throughout your hike into the countryside you may be invited into Ger camps. Getting to see this side of Mongolian life makes the entire trip worthwhile. I highly recommend backpacking into the national park. It is a good novice to intermediate hike...if you go far enough in it can be a good challenge to the advanced backpacker. However, be warned...when you are hiking be aware that you are 2500 feet above sea level, so make sure you are in good shape.
During the trip my friend and I were invited multiple times by families to come and have tea, milk, bread, and the most delicious yogurt I've ever had. Note, if you are invited into a ger make sure you stand or sit on the far left side. This is a sign of respect. The family will invite you closer to the head of the ger the more comfortable they become with you. One family we visited had a little baby and we had the chance to play with him while the mother served us. As we left we gave all the children chocolate and thanked our hosts.
There are very few hiking maps of Terelj, so do not be surprised if you cannot find a comprehensive map. My friend and I managed to haggle a photocopy of one at a map shop in Ulaanbataar, so unless you speak Russian or Mongolian you are out of luck. Just stick to the well worn paths if you do not want to get lost.
The roads to Terelj are rough and Mongolian traffic is difficult to understand, so you may want to take a guide or rent a van. There is an admission to get into the park, so bring cash. I do not recall the exact price, but compared to admission prices in the US it is not much.
Please respect the locals and the park by packing all your trash out.