He was a younger cousin of Yuan Shao 袁紹 and, as a member of a highly merited family, climbed the ladder of official career from gentleman of the interior (langzhong 郎中) to Leader of the palace gentlemen (huben zhonglangjiang 虎賁中郎將) and general. When Dong Zhuo 董卓 usurped the central government, he fled to Nanyang 南陽, where he established a virtually independent rule in this economically relatively advanced part of the empire.
He was at odds with his cousin Yuan Shao, and while the latter sought alliance with Liu Biao 劉表 in the south, Yuan Shu rather united his forces with that of Gongsun Zan 公孫瓚 in the northeast. In 193, Yuan Shu undertook a campaign against the warlord Cao Cao 曹操, yet because Liu Biao cut off his lines of supply, Yuan Shu lost the battle of Zhenghan 正酣. He withdrew and established a stronghold in Shouchun 壽春, while the regional inspector (cishi 刺史) Chen Yu 陳瑀 resided in Jiujiang 九江 to govern Yuan Shu's province.
Inspite of his insecure position, Yuan Shu proclaimed himself emperor in 197. He was first defeated by Lü Bu 呂布, and then by Cao Cao. When he was running off his last sources of support and supplies, he tried to seek for refuge with Yuan Shao's oldest son Yuan Tan 袁潭, where he died soon.