He was good at reading and the performing arts and patronized Confucian scholars. When he was still heir apparent he criticized his father for the harsh penal law used in the empire and instead suggested using the moral-centered methods for government proposed by the Confucians, yet his father was very angry about the chaotic methods of governing brought forward by his son.
When Liu Shi became emperor, he appointed some Confucian scholars like Gong Yu 貢禹, Xue Guangde 薛廣德, Wei Xuancheng 韋玄成 or Kuang Heng 匡衡 as his counsellors-in-chief. During his reign, the authority of the central government nontheless suffered from a growing loss of power in favour to the local magnates that possessed large tracts of lands and owned thousands of slaves.
In 33 BCE the Xiongnu 匈奴 khan (chanyu 單于) Huhanya 呼韓邪 asked for an alliance by marriage (heqin 和親). At that occasion Wang Zhaojun 王昭君, a court lady that had never met her emperor's favour, asked to be selected as the princess be sent to the khan's court. When the emperor saw her, he was astonished that he had never noticed such a beautiful woman among his ladies.
In 38 BCE the emperor was saved his life by Lady Feng 馮倢伃 when he was attacked by a bear.
Emperor Yuan was buried in the tomb mound Weiling 渭陵 and was succeeded by his son Liu Ao 劉驁, who is known as Emperor Cheng 漢成帝 (r. 33-7 BCE).