As one of many Yan states from the period, they were given the prefix of "Southern" by historiographers to distinguish them with the others as they were based south of the Yellow River.

The Central Plains was quickly overran by Wei, and Murong Bao was forced to abandon his capital, Zhongshan (中山, in modern Baoding, Hebei) and evacuate to Longcheng in Liaoning.

As Yan had a much smaller population compared to the neighbouring Wei and Jin, Beide enacted policies to encourage manpower movement such as corvee exemptions while also rectifying the household registry.

During his reign, Chao purged his uncle's retainers like Murong Zhong while elevating his own confidants, particularly Gongsun Wulou, to power, which brought the government into disarray.

In 407, wanting to retrieve his mother and wife who were still in Later Qin, Chao agreed to become a vassal and give up his court musicians in return for their safe passage to Southern Yan.

The Later Qin, held down by their war with the Helian Xia, was unable to send reinforcements to Southern Yan, and Liu Yu eventually took Guanggu in 410.