Wang Mang's main forces had already been destroyed, leaving only the two major cities of Chang'an and Luoyang under his control. Wang Xian, the governor of Hongnong (in present-day Henan), simply surrendered to the Han army, and many powerful aristocratic families followed Wang Xian to attack Chang'an. They set fires everywhere inside and outside the city. Wang Mang, dressed in ceremonial robes and holding a short dagger, sat in the front hall, desperately guarding sixty thousand jin of gold and other treasures.
The next day, the fire reached the front hall. Officials helped Wang Mang flee to the Jian Terrace in the Taiye Pool. As the sun set, the rebel army stormed the terrace and killed Wang Mang. Wang Xian found the imperial seal, put on the dragon robe and crown that Wang Mang had worn, and declared himself emperor.
The envoys sent by Liu Xuan seized the imperial seal and arrested Wang Xian for punishment. Liu Xuan's greatest concern was Liu Xiu. First, he devised a plan to send Liu Xiu to Luoyang to repair the palace in preparation for moving the capital; later, he dispatched Liu Xiu, in his capacity as Grand Marshal, to represent Liu Xuan and pacify the various forces in Hebei. When Liu Xiu arrived in Hebei, a local fortune-teller named Wang Lang declared himself emperor, but was soon defeated by Liu Xiu. Liu Xiu endured great hardships in Hebei, sometimes not even having a single meal. He allied with forces opposing Wang Lang and then defeated another rebel army known as the "Tongma Army," expanding his own army to several hundred thousand troops.
At this time, numerous rebel and warlord forces across the country were declaring themselves emperors. The most prominent included: Liu Xuan of the Han forces; the leader of the Red Eyebrows Army, Fan Chong, who installed Liu Penzi, a fifteen-year-old cowherd from the Han royal family, as emperor; and Gongsun Shu, based in Chengdu. Liu Xiu had two close confidants: one was Feng Yi, originally a general under Wang Mang who later joined Liu Xiu. Feng Yi always sat alone under a large tree during military rests, earning him the nickname "General of the Great Tree"; the other was Deng Yu, Liu Xiu's classmate from their days at the Imperial Academy. Both urged Liu Xiu to declare himself emperor and unify the empire. Thus, in 25 AD, the thirty-one-year-old Liu Xiu ascended the throne as Emperor Guangwu of Han, founding the Eastern Han Dynasty.
Emperor Guangwu sent "General of the Great Tree" Feng Yi to attack the Han forces in Luoyang, while assigning Deng Yu an army of thirty thousand to fight the Red Eyebrows. However, Deng Yu, with his thirty thousand troops, did not march on Chang'an. Instead, he first attacked three commanderies including Shangjun to seize livestock and grain supplies, intending to let Liu Xuan in Chang'an and the Red Eyebrows exhaust each other before moving in to eliminate both rebel forces. After Liu Xiu pacified Yan and Zhao, he turned back to attack Luoyang. He fought for several months but failed to capture the city.
Meanwhile, the Red Eyebrows Army, bearing the banner of the Han Son of Heaven Liu Penzi, launched a campaign against Liu Xuan and stormed Chang'an. Liu Xuan fled north with his wife and palace women. The Red Eyebrows ordered Liu Xuan to surrender immediately. With no choice, Liu Xuan presented the imperial seal to Liu Penzi, who enfeoffed him as the King of Changsha. After Liu Xuan's downfall, Liu Xiu persuaded the Han forces in Luoyang to surrender. From then on, he established Luoyang as his capital (since Luoyang is east of Chang'an, the later Han is also known as the Eastern Han).
The Red Eyebrows Army had consumed all their food supplies in Chang'an. Fan Chong was forced to lead his army of several hundred thousand troops westward, but unexpectedly encountered a blizzard, freezing many soldiers and horses to death. Desperate, when he turned back toward Chang'an, Deng Yu's forces had already occupied the city. Deng Yu immediately launched an attack but suffered a defeat, losing Chang'an as well. Emperor Guangwu of Han urgently dispatched Feng Yi with a fresh army to replace Deng Yu, instructing him: "The common people in the Chang'an region are already extremely impoverished. When you go on this campaign, if the Red Eyebrows are willing to surrender, allow the soldiers to return home and farm. Most importantly, stabilize the people's hearts and do not kill recklessly."
Feng Yi led his army forward. Emperor Guangwu also issued an edict to Deng Yu: "Do not fight to the death. The Red Eyebrows have no food and will inevitably move eastward. Return quickly."
When Feng Yi arrived in Chang'an, he set up an ambush and then issued a challenge to the Red Eyebrows. As soon as the Red Eyebrows took the field, they fell into the ambush. After fighting desperately all day, they suffered heavy casualties. Feng Yi had some of his soldiers paint their eyebrows red, disguising themselves as Red Eyebrow soldiers and infiltrating their ranks. As the Red Eyebrows were caught in a dilemma, Feng Yi ordered his troops to shout loudly: "Surrender quickly! Surrender and you won't be killed!"
The Red Eyebrows' morale instantly collapsed, and they were disarmed.
The remaining ten-odd thousand Red Eyebrows, led by Fan Chong, began marching east. Emperor Guangwu led a large army to set up an ambush, surrounding them completely as soon as they approached. With no way to escape, Fan Chong sent envoys to sue for peace. Emperor Guangwu ordered them to surrender, and Fan Chong brought Liu Penzi to meet Emperor Guangwu, surrendering obediently.
Emperor Guangwu ordered food to be prepared immediately, giving the more than one hundred thousand Red Eyebrow soldiers a good meal. Then, Emperor Guangwu brought Fan Chong and his men to Luoyang, granting them land, houses, and official positions. However, within a few months, he accused them of plotting rebellion and executed them.
The two largest peasant rebel armies that had overthrown the Xin Dynasty—the Lulin and the Red Eyebrows—were now both eliminated by Emperor Guangwu of Han.