Liu became involved in the suppression of the Taiping Rebellion at an early age, and worked closely with Zeng Guofan and Li Hongzhang as he emerged as an important Huai Army officer.

In the aftermath of the Sino-French War, succeeding Ding Richang he was appointed the first governor of the newly established Taiwan Province.

[b] Today he is remembered for his efforts in modernizing Taiwan during his tenure as governor, and several institutions have been given his name, including Ming Chuan University in Taipei.

At age 18, Liu joined a local gang of bandits in the mountains, and at 20 he took part in the early Nien Rebellion.

On 5 August 1884 Rear Admiral Sébastien Lespès destroyed three Formosan shore batteries in the port of Keelung in north Taiwan by naval bombardment.

It was rumoured that he intended to flee south to Tek-cham (modern-day Hsinchu), and his arrival in Taipei was greeted with rioting.

[8] Having never gotten full support from the mainland's Imperial court and the navy presence he wanted, Liu is instead remembered for his efforts to lay the foundation of modern infrastructure in Taiwan as its first provincial governor.

[9] He continued and enlarged Shen Baozhen's ideals for managing Taiwan, and started a massive modernization programme that included setting up defenses, developing transportation, taxation, farming, public security, commercial enterprises, financial affairs, and education.

Liu's governance saw China's earliest nighttime electrical illumination when the walled prefecture city of Taipei was lightened up with street lamps in 1887.

A longtime animosity between the Xiang and the Huai Armies is believed to be another factor in Liu's eventual political frustration.

In June 1891, Liu Mingchuan resigned his post as governor of Taiwan for health reasons at the age of 56, and returned to his hometown in Anhui.

Most of the modernization projects initiated by Liu came to a halt shortly after his resignation and were never restarted throughout the rest of the Qing reign over the island.

Whether or not this is true, the policy reversal adopted by Liu's successors—affiliated with the Huai faction or not—illustrates the financial difficulties China's early modernizers faced while the empire's fiscal resources were spent on the creation of the Beiyang Fleet and the renovation of the Summer Palace.

Liu died in his hometown of Hefei in 1896, and was given the title of Grand Protector of the Crowned Prince (太子太保) and the posthumous name Zhuang Su (壯粛).