The Chu army led by Song Yi and Xiang Yu reached Anyang, some distance away from Julu (巨鹿; in present-day Xingtai, Hebei), where Zhao Xie's forces had retreated to. Song Yi ordered the troops to lay camp there for 46 days and he refused to accept Xiang Yu's suggestion to proceed further. Xiang Yu took Song Yi by surprise in a meeting and killed him on a charge of treason. Song Yi's other subordinates were afraid of Xiang Yu so they let him become the acting commander-in-chief. Xiang Yu sent a messenger to inform King Huai II and the king approved Xiang's command.
In 207 BC, Xiang Yu's army advanced towards Julu and he sent Ying Bu and Zhongli Mo to lead the 20,000 strong vanguard army to cross the river and attack the Qin forces led by Zhang Han, while he followed behind with the remaining majority of the troops. After crossing the river, Xiang Yu ordered his men to sink their boats and destroy all but three days worth of rations, in order to force his men to choose between prevailing against overwhelming odds within three days or die trapped before the walls of the city with no supplies or any hope of escape. Despite being heavily outnumbered, Chu forces scored a great victory after nine engagements, defeating the 300,000 strong Qin army. After the battle, other rebel forces, including those not from Chu, came to join Xiang Yu out of admiration for his martial valour. When Xiang Yu received them at the gate, the rebel chiefs were so fearful of him that they sank to their knees and did not even dare to look up at him.
Zhang Han sent his deputy Sima Xin to Xianyang to request for reinforcements and supplies from the Qin imperial court. However, the eunuch Zhao Gao deceived the emperor and the emperor dismissed Zhang Han's request. Zhao Gao even sent assassins to kill Sima Xin when the latter was returning to Zhang Han's camp, but Sima managed to escape alive. In dire straits, Zhang Han and his 200,000 troops eventually surrendered to Xiang Yu in the summer of 207 BC. Xiang Yu perceived the surrendered Qin troops as disloyal and a liability, and had them executed by burying them alive at Xin'an (新安; in present-day Yima, Henan). Zhang Han, along with Sima Xin and Dong Yi, were spared from death. Xiang Yu appointed Zhang Han as "King of Yong", while Sima Xin and Dong Yi were respectively conferred the titles of "King of Sai" and "King of Di".
After his victory in the Battle of Julu, Xiang Yu prepared for an invasion on Guanzhong, the heartland of the Qin Dynasty. In the winter of 207 BC, the last Qin ruler Ziying surrendered to Liu Bang in Xianyang (Qin's capital), bringing an end to the Qin Dynasty. When Xiang Yu arrived at Hangu Pass, the eastern gateway to Guanzhong, he saw that the pass was occupied by Liu Bang's troops, a sign that Guanzhong was already under Liu's control. Cao Wushang (曹無傷), a subordinate of Liu Bang, sent a messenger to see Xiang Yu, saying that Liu would become King of Guanzhong in accordance with King Huai II's earlier promise, while Ziying would be appointed as Liu's chancellor. Xiang Yu was furious after hearing that. At that time, he had about 400,000 troops under his command while Liu Bang only had a quarter of that number.
As strongly encouraged by his advisor Fan Zeng, Xiang Yu invited Liu Bang to attend a feast at Hong Gate and plotted to kill Liu during the banquet. However, Xiang Yu later listened to his uncle Xiang Bo (a friend of Liu Bang's strategist Zhang Liang) and decided to spare Liu Bang. Liu Bang escaped during the banquet under the pretext of going to the latrine.
Xiang Yu paid no attention to Liu Bang's presumptive title and led his troops into Xianyang in 206 BC. He ordered the execution of Ziying and his family, as well as the destruction of the Epang Palace by fire. It was said that Xiang Yu would leave behind a trail of destruction in the places he passed by, and the people of Guanzhong were greatly disappointed with him.
Despite advice from his subjects to remain in Guanzhong and continue with his conquests, Xiang Yu was insistent on returning to his homeland in Chu. He said, "To not return home when one has made his fortune is equivalent to walking on the streets at night in glamourous outfits. Who would notice that?" One of his followers said, "It is indeed true when people say that the men of Chu are apes dressed in human clothing." Xiang Yu had that man boiled alive when he heard that insult.
After the downfall of the Qin Dynasty, Xiang Yu offered King Huai II the more honourable title of "Emperor Yi of Chu" and announced his decision to divide the former Qin Empire. Xiang Yu declared himself "Hegemon-King of Western Chu" (西楚霸王) and ruled nine in the former Liang and Chu territories, with his capital at Pengcheng (彭城; present-day Xuzhou, Jiangsu). In the spring of 206 BC, Xiang Yu divided the former Qin Empire into the Eighteen Kingdoms, to be granted to his subordinates and some leaders of the former rebel forces. He moved some of the rulers of other states to more remote areas and granted the land of Guanzhong to the three surrendered Qin generals, ignoring Emperor Yi's earlier promise to appoint Liu Bang as king of that region. Liu Bang was relocated to the remote Hanzhong area and given the title of "King of Han" (漢王).
Xiang Yu appointed several generals from the rebel coalition as vassal kings, even though these generals were subordinates of other lords, who should rightfully be the kings in place of their followers. Xiang Yu also left out some other important rebel leaders who did not support him earlier, but did contribute to the overthrow of Qin. In winter, Xiang Yu moved Emperor Yi to the remote area of Chen County (郴縣; present-day Chenzhou, Hunan), effectively sending the puppet emperor into exile. At the same time, he issued a secret order to the vassal kings in that area and had the emperor assassinated during his journey (205 BCE). The emperor's death was later used by Liu Bang as political propaganda to justify his war against Xiang Yu.
Shortly after the death of Emperor Yi, Xiang Yu had Han Cheng (King of Hán) put to death and seized Han's lands for himself. Several months later, Tian Rong (chancellor of Qi) took control over the Three Qis (Jiaodong, Qi and Jibei) from their respective kings and reinstated Tian Fu as the King of Qi, but he took over the throne himself afterwards. Similarly, Chen Yu, a former vice chancellor of Zhao, led an uprising against the King of Changshan, Zhang Er, and seized Zhang's domain and reinstalled Zhao Xie as the King of Zhao.