桓玄
By summer 402, however, Liu Yu was again in the army, and by 403 he carried a general's rank, when Sun En's nephew Lu Xun (), who had succeeded him after his death in battle in 401, attacked Dongyang (東陽, in modern Jinhua, Zhejiang), and Liu Yu repelled Lu's attack. He then counterattacked and won several battles over Lu, forcing Lu to head south on the sea. At this time, He Wuji tried to persuade him to declare a rebellion at Shanyin (山陰, in modern Shaoxing, Zhejiang) against Huan Xuan, but at the advice of Kong Jing (), he declined at this time, waiting for Huan Xuan to seize the throne so that he would have a reason. When Huan Xuan's cousin Huan Qian () asked Liu Yu's opinion about whether Huan Xuan should receive the throne, Liu Yu pretended to be a Huan clan loyalist and encouraged Huan Xuan to receive the throne. In winter 403, Huan Xuan forced Emperor An of Jin to yield the throne to him, establishing the new state of Chu. Liu Yu initially continued to feign loyalty, and Huan Xuan, believing in him and his talents, considered giving him greater authorities, despite counsel from his wife Empress Liu that Liu Yu could not be trusted and should be executed.