In 206 BC, Liu Bang led his forces to attack Guanzhong. At that time, Xiang Yu was at war with Qi and did not focus on resisting the Han forces. The following year, Liu Bang formed an alliance with another five kingdoms and attacked Western Chu with a 560,000 strong army, capturing Xiang Yu's capital of Pengcheng. Upon hearing that, Xiang Yu led 30,000 men to attack Liu Bang and defeated the latter at the Battle of Pengcheng, with the Han army suffering heavy casualties.
Liu Bang managed to escape after his defeat with Xiang Yu's troops on pursuit. Han troops retreated to Xingyang and defended the city firmly, preventing Chu forces from advancing west any further, but only managed to hold on until 204 BC. Liu Bang's subordinate Ji Xin disguised himself as his lord and surrendered to Xiang Yu, buying time for Liu Bang to escape. When Xiang Yu learnt that he had been fooled, he was furious and had Ji Xin burnt to death. After the fall of Xingyang, Chu and Han forces were divided on two fronts along present-day Henan. However, Xiang Yu's forces were not faring well on the battlefront north of the Yellow River, as the Han army led by Han Xin defeated his troops in every single battle. At the same time, Liu Bang's ally Peng Yue led his men to harass Xiang Yu's rear.
By 203 BC, the tide has turned in favour of Han. Xiang Yu managed to capture Liu Bang's father after a year-long siege and he threatened to boil Liu's father alive if Liu refused to surrender. Liu Bang remarked that he and Xiang Yu were oath brothers,[4] so if Xiang killed Liu's father, he would be guilty of patricide. Xiang Yu requested for an armistice, known as the Treaty of Hong Canal, and returned the hostages he captured back to Liu Bang as part of their agreement. The treaty divided China into east and west under the Chu and Han domains respectively.
eastwards, Liu Bang renounced the treaty and led his forces to attack Western Chu. Liu Bang sent messengers to Han Xin and Peng Yue, requesting for their assistance in forming a three-pronged attack on Xiang Yu, but Han Xin and Peng Yue did not mobilise their troops and Liu Bang was defeated by Xiang Yu at the Battle of Guling. Liu Bang retreated and reinforced his defences, while sending emissaries to Han Xin and Peng Yue, promising to grant them fiefs and titles of vassal kings if they would join him in attacking Western Chu.
In 202 BC, Han armies led by Liu Bang, Han Xin and Peng Yue attacked Western Chu from three sides and trapped Xiang Yu's army, which was low on supplies, at Gaixia (垓下; in present-day Lingbi County, Anhui). Liu Bang ordered his troops to sing folk songs from the Chu region to create a false impression that Xiang Yu's native land had been conquered by Han forces. The morale of the Chu army plummeted and many of Xiang Yu's troops deserted in despair. Xiang Yu sank into a state of depression and he composed the Song of Gaixia. His concubine Consort Yu committed suicide. The next morning, Xiang Yu led about 800 of his remaining elite cavalry on a desperate attempt to break out of the encirclement, with 5,000 enemy troops pursuing them.
After crossing the Huai River, Xiang Yu was only left with a few hundred soldiers. They were lost in Yinling (陰陵) and Xiang Yu asked for directions from a farmer, who directed him wrongly to a swamp. When Xiang Yu reached Dongcheng (東城), only 28 men were left, with the Han troops still following him. Xiang Yu made a speech to his men, saying that his downfall was due to Heaven's will and not his personal failure. After that, he led a charge out of the encirclement, killing one Han general in the battle. Xiang Yu then split his men into three groups to confuse the enemy and induce them to split up as well to attack the three groups. Xiang Yu took the Han troops by surprise again and slew another enemy commander, inflicting about 100 casualties on the enemy, while he only lost two men.