Emperor Qianfei, suspecting the high-level officials of conspiring against him, soon carried out a campaign of terror against them, and because he feared assassinations, he greatly endeared himself to a number of fierce army officers, including Shen Youzhi, Zong Yue (宗越), Tan Jin (譚金), and Tong Taiyi (童太一), making them command his personal guards.
Soon, nearly the entire empire pledged loyalty to Liu Zixun, and Emperor Ming was left with control of only the several commanderies around Jiankang.
However, Liu Zixun's forces proceeded slowly toward Jiankang, and Emperor Ming used the opportunity to gather his troops in preparation of a war.
When Shen and Zhang subsequently arrived at Xue's headquarters at Pengcheng (彭城, in modern Xuzhou, Jiangsu), their siege of the city failed, forcing them to withdraw in early 467.
They were pursued and then defeated by Xue and the Northern Wei general Yuchi Yuan (尉遲元), suffering extreme losses.
In 469, Emperor Ming made Shen the governor of Ying Province (郢州, modern eastern Hubei), and there, he began to build up a personal army which he hoped would be loyal to him.
Emperor Houfei's administration was initially dominated by Emperor Ming's associates Wang Daolong (王道隆) and Ruan Dianfu (阮佃夫), who distrusted the strict governor of the important Jing Province (荊州, modern central and western Hubei), Cai Xingzong (蔡興宗).
According to historical records written in the subsequent Southern Qi Dynasty, Shen effectively made Jing Province into a personal domain, disregarding imperial directives, and saving resources in preparation of eventual war.
In 474, when Emperor Houfei's uncle Liu Xiufan (劉休範) the Prince of Guiyang declared a rebellion, he manufactured a prophecy in which Shen Youzhi was referred to was prime minister, and had the prophetic writing delivered to Shen, who however declined to join his rebellion, and subsequently aligned with Wang Sengqian (王僧虔) the governor of Xiang Province (湘州, modern Hunan), Zhang Xingshi the governor of Yong Province (雍州, modern northwestern Hubei and southwestern Henan), and the chief of staff of Liu Xie (劉燮) the Prince of Jinxi and governor of Ying Province to attack Liu Xiufan's base at Xunyang, forcing Xunyang's surrender and killing Liu Xiufan's two sons.
In the aftermath of Liu Xiufan's defeat, the high-level officials wanted to recall Shen to the capital, but did not dare to do so without his agreement in fear of causing him to rebel, and so sent messenger in the name of Emperor Ming's wife Empress Dowager Wang to try to persuade Shen to accept a promotion and a recall.
Shen Youzhi often claimed that he had entered into a secret oath with Emperor Ming, written on white silk that he then sewed into his vest.
Soon, claiming that he had received secret instructions from Empress Dowager Wang, hidden in a pair of candles, Shen did announce a rebellion, accusing Xiao of intending to usurp the throne.
He initially progressed quickly toward Jiankang, but as he passed Yingcheng (郢城, in modern Wuhan, Hubei), he was provoked by insults of Liu Shilong (柳世隆), the chief of staff for Liu Zan (劉贊) the Prince of Wuling and governor of Ying Province into stopping and laying siege to the well-fortified city.
On 26 April 483,[3] Xiao Daocheng's son Emperor Wu of Southern Qi, recognizing Shen Youzhi's accomplishments, permitted him to be reburied with proper honors.