Peng Yue was a native of Changyi (present-day Jinxiang County, Shandong), and was originally a fisherman. Following the Dazexiang Uprising in 209 BCE, Peng Yue was nominated by his fellows to be their leader and he led an uprising against the Qin dynasty. Initially, Peng Yue was reluctant to rebel, but obliged eventually and he arranged for his supporters to meet him the next morning. However, his men did not arrive on time and the last one came at noon. Peng Yue said, "Since everyone has chosen me to be the leader, there must be discipline. As there are too many people who were late today, I cannot possibly punish all of them. The last man to arrive will be executed."
In 205 BCE, Peng Yue allied with Liu Bang, the King of Han, and became one of Liu's generals after Liu promised to grant him land and the title of a vassal king. Earlier on, Peng Yue had refused to send his troops to help Liu Bang, that resulted in the latter's defeat by Xiang Yu at the Battle of Guling. Three years later, Peng Yue conquered more than 20 cities around Changyi and acquired a large amount of supplies. He then led his troops southwards and joined the armies of Han Xin and Liu Bang at the Battle of Gaixia against Xiang Yu. Peng Yue's contributed greatly to the eventual Han victory over Xiang Yu. After Liu Bang founded the Han dynasty, Peng Yue was conferred the title of "King of Liang" (梁王) and granted the lands of former Wei state as his kingdom.
In 196 BCE, Liu Bang led an army to suppress a rebellion by Chen Xi, the Marquis of Yangxia, and he requested reinforcements from Peng Yue. Peng Yue claimed to be ill and sent his subordinates to help Liu Bang in place of him. After Chen Xi's rebellion was quelled, Liu Bang heard rumours that Peng Yue was intending to rebel against him as well, and he had Peng arrested. Peng Yue was demoted to the status of a commoner and exiled to the remote Qingyi County (in present-day Ya'an, Sichuan). Along the way, Peng Yue encountered Empress Lü Zhi, who wanted to have him killed. He pleaded with her to spare his life and let him return home to Changyi, and the empress pretended to agree. Peng Yue was brought back to Luoyang where he was subsequently executed. Empress Lü ordered his clan put to death as well. Peng Yue's corpse was minced into pieces, salted like meat, and distributed to all the noble families of China, who found this very disturbing.