In 527, as Northern Wei was embroiled in agrarian rebellions, Xiao Baoyin rebelled and tried to reestablish Southern Qi, but was soon defeated and forced to flee to a rebel leader, Moqi Chounu (万俟醜奴), and he served under Moqi until both were captured in 530 by the paramount general Erzhu Rong's nephew Erzhu Tianguang.
During Emperor Wu's reign, Xiao Luan carried the title of Marquess of Xichang and was a high-level official.
Xiao Baoyin's eunuch Yan Wenzhi (顏文智) and attendant Ma Gong (麻拱) therefore plotted to try to save the 15-year-old prince's life.
After hiding and traveling, Xiao Baoyin eventually reached the border city of Shouyang (壽陽, in modern Lu'an, Anhui), which Northern Wei had captured from Southern Qi in 500.
While on that campaign, Liang's Emperor Wu wrote him a personal letter, promising that if he defected from Northern Wei, he would be given the border provinces as well as his surviving relatives.
In fall 524, Xiao Baoyin was commissioned to attack one of the major rebels, Mozhe Niansheng (莫折念生), who had taken much of modern western Shaanxi and eastern Gansu and claimed the title of Emperor of Qin.
Several months later, Xiao Baoyin in turn suffered a major defeat at the hands of Moqi Chounu, and his lieutenant Cui Yanbo (崔延伯), who was instrumental in the victory over Mozhe Tiansheng, was killed.
Xiao Baoyin was not sure whether to retreat or to continue fighting, but began to worry that Emperor Xiaoming's mother and regent Empress Dowager Hu would punish him.
Moqi Chounu, who soon declared himself emperor, gave Xiao Baoyin the title Taifu (太傅, "imperial professor") and made him a major general.
Erzhu Tianguang quickly scored a number of victories, and after first tricking Moqi into complacency, made a surprise attack on him and captured him.
As he was about to take poison, the Princess Nanyang and his children visited him, crying bitterly, but Xiao Baoyin was not mournful, merely stating, "This is heaven's wish.