He originally hailed from Fangdong 防東 (房東) in the commandery of Shanyang 山陽 (today's Shanxian 單縣 or Jinxiang 金鄉, Shandong) and served under Emperor Huan 漢桓帝 (r. 146－167) as a palace attendant-in-ordinary (zhongchangshi 中常侍). Cunningly and greedy, he was in a position to extort money from court officials.
During the Yanxi reign-period 延熹 (158-166), when the empire was slain by war and the state treasury empty, he embezzled the funds reserved for official salaries and the tax payments coming in from the princedoms. With this money he purchased 5,000 bolts of the finest silks and presented these to the emperor, who rewarded him with the title of a Marquis Inside the Passes (guannei hou 關內侯).
The eunuch clique at the court managed the purge of the emperor's brother-in-law Liang Ji 梁冀, who had tried to get rid of the eunuchs, but was in turn accused of rebellion. For his participation in this plot, Hou Lan was given the title of Marquis of Gaoxiang 高鄉侯. A retainer of Hou, the palace attendant (xiao huangmen 小黃門) Duan Gui 段珪, was given a tract of land in Jiyin 濟陰.
When Hou's underlings harassed the local population in Jibei 濟北, the princely counsellor (xiang 相) Tang Yan 滕延 had them arrested and executed, and their corpses thrown at the roadside. Enraged, Hou Lan and Duan Gui slandered Tang Yan and effected his imprisonment. From then on, Hou Lan had a free hand.
His older brother Hou Can 侯參 was appointed regional inspector (cishi 刺史) of the province of Yizhou 益州. He blackmailed rich landowners and confiscated their properties. When the Defender-in-chief (taiwei 太尉) Yang Bing 楊秉 memorialized to the throne, notifying the emperor of this abuse of power, Hou Can killed himself, but Hou Lan was spared.
In 169 he returned to his home town to bury his mother, and built an extravagant tomb for her. Confiscating land in the surroundings, he also constructed a huge palace for himself, only second to that of the emperor. Hou commanded over a large retinue and virtually had a court of his own. His enormous power gave him a free hand in managing affairs as he liked.
Local inspector (duyou 督郵) Zhang Jianju 張儉舉 submitted a memorial to the throne, accused Hou of the abuse of power, and recommended executing the eunuch, but instead, Hou Lan turned the tables on Zhang and had him killed. Only in 172 the emperor agreed to a new memorial, deprived him of all seals, and ordered Hou to commit suicide.