He was well versed in law and had a wide network of friends and acquaintances, among whom include Liu Bang, Cao Shen, Fan Kuai, Xiahou Ying and Zhou Bo.

He hid in an outlaw stronghold on Mount Mangdang (in present-day Yongcheng, Henan) and maintained secret contact with Xiao He and Cao Shen.

In 209 BC, Chen Sheng and Wu Guang started the Dazexiang Uprising to overthrow the Qin dynasty, and was followed by numerous other rebellions throughout China.

The magistrate of Pei County considered rebelling as well, so he heeded Xiao He and Cao Shen's advice to invite Liu Bang back to support him.

Xiao He was in charge of the process and he had the names of ten respectable men in town, including Liu Bang, written on separate pieces of paper and shuffled.

Xiao He immediately grabbed the remaining pieces of paper, put them into his mouth and chewed them to shreds, after which he proclaimed Liu Bang as their leader.

Upon entering the Epang Palace, Liu Bang and most of his men seized treasures and women for themselves, while Xiao He rushed to the chancellor's office and ordered it to be heavily guarded.

Liu Bang received the title of "King of Han" and was relocated to the remote Bashu region (in present-day Sichuan), with Xiao He and his followers accompanying him.

However, Xiao He and others managed to persuade Liu Bang to temporarily remain in Bashu and build up his forces in preparation for a battle for supremacy with Xiang Yu later.

In 206 BC, Liu Bang conquered the Three Qins and left Xiao He in charge of Guanzhong and Bashu, while he led his army eastward to attack Xiang Yu's Western Chu kingdom.

Xiao He governed those territories effectively and provided support to Liu Bang's army at the warfront in the form of supplies, provisions and reinforcements.

Under the new system, taxes were readjusted to reduce the burden on the poor; land that used to belong to the Qin aristocracy was redistributed to peasants, in order to increase agricultural output; capable and respectable men were selected from among commoners to assist government officials in administration.

The following year, when Gaozu rewarded his subjects according to their contributions, Xiao He received the title of "Marquis of Zan" (酇侯) in addition to his appointment as chancellor.

In 201 BC, Emperor Gaozu wanted to build his capital in Luoyang but Zhang Liang suggested Xianyang instead, because it was surrounded by natural defences such as mountain passes, and had fertile land for agriculture.