In 386, after hearing of Fu Jian's death the prior year, Lü Guang posthumously honoured him as Emperor Wenzhao before introducing a new reign era at his capital, Guzang (姑臧, in modern Wuwei, Gansu).

While a brilliant commander, Lü Guang was an unpopular ruler, as he was prone to killing his subjects and heavily relied on military might to consolidate his rule.

In 386, he had several famous local literati executed, leading to a wave of rebellions breaking out in his territory, one of which was led by a member of the Former Liang ruling family, Zhang Dayu.

In 397, intending to punish Western Qin for rebelling, Lü Guang began another campaign against them, but this time, his forces were badly routed.

Most notably, the Tufa-Xianbei tribe rebelled at Lianchuan (廉川堡, in modern Haidong Prefecture, Qinghai) and founded the Southern Liang, while at Jiankang (建康, in modern Zhangye, Gansu), the Han Chinese administrator, Duan Ye, with the help of the Lushuihu Juqu tribe, established the Northern Liang.

Later Qin bestowed Lü Long the title of Duke of Jiankang and allowed him to remain at Guzang, although they also brought back with them Kumārajīva, who had been living as a captive under Later Liang.

No longer able to withstand the pressure, he surrendered his entire territory to Later Qin and moved to their capital of Chang'an in 403, thus ending the Later Liang.