As one of the founders of Chinese modern dramas, he made a considerable contribution to dramaturgical theory.

From 1921 to 1924, Yu actively participated in the New Culture Movement (Chinese:新文化运动) and developed a great interest in drama.

At the same time, he, together with Xu Zhimo, set up a bookshop named New Moon (Chinese: 新月), where he took the responsibility of editor and manager.

When the Second Sino-Japanese War began, Yu moved his school to Changsha, Chongqing to organize students to do propaganda work.

Yu Shangyuan consistently adhered to Cai Yuanpei's idea of school governance and took the lead in writing the Syllabus of Performing Arts, Syllabus of director Arts and synopsis of stage design (Chinese: 表演艺术大纲, 导演艺术大纲, and 舞台设计提高).

[6] Yu Shangyuan and Wen Yiduo launched the "National Drama Movement", which lay the root for a different understanding of Theatre Arts later.

[7] In the summer of 1924, Yu shangyuan became acquainted with Wen Yiduo, Xiong Fuoxi, who shared the same interest with him.

Soon after, Wen Yiduo and Xiong Fuoxi co-edited a one-act play, and then, together with Yu Shangyuan, organized the performance of the Cowherd and the Weaving Maid (牛郎织女).

To carry out the "National Opera Movement", Yu and his friends conducted an extensive survey.

After two months of investigation, deliberation, and modification, they drafted the "Peking Arts Theatre Program Outline".

In the Outline, they envisaged to build Beiping Art Theatre actor schools, libraries and museums on theater.

In the spring of 1925, they initiated an English drama "Lute" (琵琶记) which was written and performed by themselves and invited Yu Shangyuan and Zhao Taimou to guide rehearsals.

The local newspaper Christian Science Monitor reported the special event of the Chinese students.

Later, they established the Beiping Art College Drama Department, set up the column of the" drama Journal" (剧刊) in the "Morning News Supplement" (晨报 副刊) to discuss the National Opera, founded " New Moon " (新月) in Shanghai to promote "the Chinese drama movement" (Chinese: 国剧运动) and sponsored small theaters in Beiping to develop Bai Yang and other outstanding performing artists.

After their returning home, their most splendorous work is the founder of the "drama highest institution"—National Theatre College, and later, many of the core figure on the stage and screen are out of school.