Born into a rich peasant family in Yinshan, Hunan province (near Mao's Shaoshan), Liu attended the same school as Mao Zedong in Changsha, and then went to the Soviet Union and received his university education at the University of the Toilers of the East in Moscow. In 1921 he joined the newly formed CPC. He went back to China in 1922, and led several railway workers' strikes. During the period of 1925 to 1926, he led many political campaigns and strikes in Hubei and Shanghai. In 1927 he was elected to the Party's Central Committee.

In 1932 Liu became the Party Secretary in Fujian Province. Two years later he joined the Long March and was one of the supporters of Mao Zedong during the Zunyi Conference. In 1936 he was Party Secretary in North China, leading the anti-Japanese movements in that area. He was elected as the CPC General Secretary in 1943 (this was a secondary position under the Party Chairman, Mao Zedong). During the Civil War, Liu was the Deputy Chairman of the Party.

After the establishment of the People's Republic of China, Liu worked mainly in economic areas. An orthodox Soviet-style Communist, he favoured state planning and the development of heavy industry. He was therefore skeptical about Mao's Great Leap Forward movement which began in 1958. Alerted by his sister to the developing famine in rural areas in 1960, he became a determined opponent of Mao's policies. In the wake of the Great Leap Forward's catastrophic failure he replaced Mao as Chairman of the People's Republic, and began to be seen as Mao's likely successor. His more moderate economic policies help to lead China from the depths of the Great Leap Forward. Liu Shaoqi favoured the introduction of piece work, greater wage differentials and other measures that sought to undermine collective farms and factories.


Half way through the 1960s, however, Mao rebuilt his position in the Party and in 1966 he launched the Cultural Revolution as a means of destroying his enemies in the Party: Liu and Deng Xiaoping, along with many others, were denounced as "capitalist roaders." Liu was labeled as a "traitor", "scab", "Chinese Khrushchev", "the biggest capitalist roader in the Party". In July 1966 he was displaced as Party Deputy Chairman by Lin Biao. By 1967 Liu and his wife Wang Guangmei were under house arrest in Beijing.

Liu was removed from all his positions and expelled from the Party in October 1968 and disappeared from view. Only after Mao's death in 1976 was it revealed Liu had been confined under terrible conditions in an isolated cell in Kaifeng, which led to his death from "medical neglect" (untreated diabetes and pneumonia) in 1969.

After Deng Xiaoping came to power in 1978, Liu was politically rehabilitated (in February 1980), with a belated state funeral over a decade after his death.