After the Empire of Japan invaded China in 1937, Hou Yao wrote and directed a series of patriotic films against Japanese aggression.

He then wrote the scripts for the films In the Dream of Loved Ones (1925) and The Star-Plucking Girl (1925), and directed Cupid's Dolls (1925, co-directed with Mei Xuechou) and The Hypocrite (1926).

[3] In 1925, Hou Yao published Techniques of Writing Shadowplay Scripts, the first theory book on Chinese filmmaking.

[2] He then briefly worked for the Beijing branch of Li Minwei's Lianhua Film Company, where he produced Sad Song from an Old Palace in 1932.

The next year, Hou merged his Culture Company into the Nanyang Film Company, a predecessor of the Shaw Brothers Studio, and directed and wrote a number of "national defence" films against Japanese aggression, including Great Wall of Blood and Flesh (1938), The Last Minute Call (1938), and Storm Over the Pacific (1939).

Because of his history of anti-Japanese activism, the Japanese murdered Hou Yao in 1942,[5][8] at the beginning of the Sook Ching massacre.

[8] A String of Pearls, a 1926 film he scripted, and Romance of the West Chamber were long thought to be lost, but rediscovered in the 1990s.

[11][12] In the 1930s, he married his assistant scriptwriter Wan Hoi-ling (Chinese: 尹海靈), who became one of Hong Kong's first women directors, but probably never formally divorced Pu.