Since his death, the fate of Liu Xiaobo has been compared by the media of the world to that of Carl von Ossietzky, Nobel Laureate in 1935 who also died as a prisoner of an authoritarian regime. Whilst Liu's death was widely reported in the Western media, it was mentioned only in the most perfunctory manner in the press inside mainland China. Censors deleted images or emojis of candles, or a simple "RIP"; searches on Sina Weibo regarding Liu's health returned the message: "According to relevant laws and policies, results for 'Liu Xiaobo' cannot be displayed". The Citizen Lab documented censorship of the death of Liu Xiaobo on WeChat and Weibo." They noted on 16 July censorship on WeChat of images related to Liu after his death, and found that even images were being blocked in one-to-one chat the first time as well as in group chat and WeChat Moments. Based on analyses of search term blocking on Weibo, the lab confirmed that a blanket ban on searches for Liu Xiaobo's name was still being applied. They said: "In fact, just his given name of Xiaobo is enough to trigger censorship in English and both Simplified and Traditional Chinese..."

Liu was born on 28 December 1955 in Changchun, Jilin, to a family of intellectuals. Liu's Father, Liu Ling (刘伶), was born in 1931 in Huaide County, Jilin Province. A professor of Chinese at Northeast Normal University, he died of liver disease in September 2011. Liu's mother, Zhang Suqin (张素勤), worked in the Northeast Normal University Nursery School. Liu Xiaobo was the third-born in a family of five boys.

In 1969, during the Down to the Countryside Movement, Liu's Father took him to Horqin Right Front Banner, Inner Mongolia. His Father was a professor who remained loyal to the Communist Party. After finishing middle school in 1974, he was sent to the countryside to work on a farm in Jilin.

In 1977, Liu was admitted to the Department of Chinese Literature at Jilin University, where he founded a poetry group known as "The Innocent Hearts" (Chi Zi Xin) with six schoolmates. In 1982, he graduated with a BA in literature before being admitted to the Department of Chinese Literature at Beijing Normal University as a research student, where he received an MA in literature in 1984 and started teaching as a lecturer thereafter. That year, he married Tao Li, with whom he had a son named Liu Tao in 1985.

In an article in The New York Review of Books, Simon Leys wrote that Liu Xiaobo's perception of the West and its relationship to a modernizing China evolved during his travels in the United States and Europe in the 1980s.

In 1986, Liu started his doctoral study program and published his literary critiques in various magazines. He became well known as a "dark horse" for his radical opinions and sharp comments on the official doctrines and establishments. Opinions such as these shocked both literary and ideological circles, and his influence on Chinese intellectuals was dubbed the "Liu Xiaobo Shock" or the "Liu Xiaobo Phenomenon". In 1987, his first book, Criticism of the Choice: Dialogues with Li Zehou, was published and became a non-fiction bestseller. It comprehensively criticized the Chinese tradition of Confucianism and posed a frank challenge to Li Zehou, a rising ideological star who had a strong influence on young intellectuals in China at the time.

Evolving from his aesthetic notion of "individual subjectivity" as opposed to Li Zehou's theory of aesthetic subjectivity which combined Marxist materialism and Kantian idealism, he upheld the notion of "aesthetic freedom" which was based on the individualistic conception of freedom and aesthetics. He also strongly criticized Chinese intellectuals' "traditional attitude of searching for rationalism and harmony as a slave mentality" just as it was criticized by radical left-wing literary critic Lu Xun during the New Culture Movement. He also echoed the New Cultural Movement's call for wholesale westernization and the rejection of Chinese traditional culture. In a 1988 interview with Hong Kong's Liberation Monthly (now known as Open Magazine), he said "modernization means wholesale westernization, choosing a human life is choosing a Western way of life. The difference between the Western and the Chinese governing system is humane vs in-humane, there's no middle ground ... Westernization is not a choice of a nation, but a choice for the human race."

On 5 June, Liu was arrested and detained in Qincheng Prison for his alleged role in the movement, and three months later he was expelled from Beijing Normal University. The government's media issued numerous publications which labeled him a "mad dog" and a "black hand" because he had allegedly incited and manipulated the student movement to overthrow the government and socialism. His publications were banned, including his fourth book, Going Naked Toward God, which was then in press. In Taiwan however, his first and third books, Criticism of the Choice: Dialogues with Leading Thinker Li Zehou (1989), and the two-volume Mysteries of Thought and Dreams of Mankind (1990) were republished with some additions.

In January 1991, 19 months after his arrest, Liu Xiaobo was convicted of "counter-revolutionary propaganda and incitement" but he was exempted from Criminal punishment due to his "major meritorious action" for preventing what could have been a bloody confrontation in Tiananmen Square. After his release, he was divorced and his ex-wife and son eventually emigrated to the US. He resumed his writing, mostly on human rights and political issues but he was not allowed to publish them in Mainland China. In 1992, in Taiwan, he published his first book after his imprisonment, The Monologues of a Doomsday's Survivor, a controversial memoir which contains his confessions and his political criticism of the popular movement in 1989.

In January 1993, Liu was invited to visit Australia and the USA for the interviews in the documentary film The Gate of Heavenly Peace. Although many of his friends suggested that he take refuge abroad, Liu returned to China in May 1993 and continued his freelance writing.

On 18 May 1995, the police took Liu into custody for launching a petition campaign on the eve of the sixth anniversary of the Tiananmen massacre, calling on the government to reassess the event and initiate political reform. He was held under residential surveillance in the suburbs of Beijing for nine months. He was released in February 1996 but was arrested again on 8 October for writing an October Tenth Declaration, co-authored by him and another prominent dissident, Wang Xizhe, mainly on the Taiwan issue, that advocated a peaceful reunification in order to oppose the Chinese Communist Party's forceful threats against the island. He was ordered to serve three years of re-education through labor "for disturbing public order" for that statement.

In 1996, while he was still imprisoned in the labor camp, Liu married Liu Xia. Because she was the only person from the outside allowed to visit him in prison, she was called his "most important link to the outside world."

After his release on 7 October 1999, Liu Xiaobo resumed his freelance writing. However, it was reported that the government built a sentry station next to his home and his phone calls and internet connections were tapped.

In 2000, while in Taiwan, Liu published the book A Nation That Lies to Conscience, a 400-page political criticism. Also published, in Hong Kong, was a Selection of Poems, a 450-page collection of the poems as correspondences between him and his wife during his imprisonment; it was co-authored by Liu and his wife. The last of three books which he published during the year was published in Mainland China, titled The Beauty Offers Me Drug: Literary Dialogues between Wang Shuo and Lao Xia, a 250-page collection of literary critiques co-authored by a popular young Writer and himself under his unknown penname of "Lao Xiao". The same year, Liu participated in founding the Independent Chinese PEN Centre and he was elected to its board of Directors and was also elected as its President in November 2003, and he was re-elected two years later. In 2007, he did not seek re-election as President but held his position as a board member until he was detained by the police in December 2008.

In international affairs, he supported U.S. President George W. Bush's 2001 invasion of Afghanistan, his 2003 invasion of Iraq and his re-election.

In 2002, he reflected on his Mao-style radical aesthetic and his political views in his earlier life in the 1980s:

In 2003, when Liu started writing a Human Rights Report on China at his home, his computer, letters and documents were all confiscated by the government. He once said, "at Liu Xia's [Liu's wife] birthday, her best friend brought two bottles of wine to [my home] but was blocked by the police from coming in. I ordered a [birthday] cake and the police also rejected the man who delivered the cake to us. I quarreled with them and the police said, "it is for the sake of your security. It has happened many bomb attacks in these days." Those measures were loosened until 2007, prior to the 2008 Beijing Olympic Games.

Liu's human rights work received international recognition. In 2004, Reporters Without Borders awarded him the Fondation de France Prize as a defender of press freedom.

In January 2005, following the death of former Chinese Premier Zhao Ziyang, who had shown sympathy towards the student demonstrations in 1989, Liu was immediately put under house arrest for two weeks before he learned about the death of Zhao. The same year, he published two more books in the US, The Future of Free China Exists in Civil Society, and Single-Blade Poisonous Sword: Criticism of Chinese Nationalism.

Liu admitted in 2006 in another interview with Open Magazine (formerly known as Liberation Monthly) that his 1988 response of "300 years of colonialism" was extemporaneous, although he did not intend to take it back, because it represented "an extreme expression of his longheld belief". The quote was nonetheless used against him. He has commented, "Even today [in 2006], radical patriotic 'angry youth' still frequently use these words to paint me with 'treason'."

Liu's detention was condemned worldwide by organisations and other countries. On 11 December 2008, the U.S. Department of State called for Liu's release, which was followed on 22 December 2008 by a similar request from a consortium of scholars, Writers, lawyers and human rights advocates. Additionally, on 21 January 2009, 300 international Writers, including Salman Rushdie, Margaret Atwood, Ha Jin and Jung Chang, called for Liu's release in a statement put out through PEN. In March 2009, the One World Film Festival awarded Liu Xiaobo the Homo Homini Award, organized by the People in Need foundation, for promoting freedom of speech, democratic principles and human rights.

In December 2009, the European Union and United States issued formal appeals calling for the unconditional release of Liu Xiaobo. China's government, responding to the international calls prior to the verdict, stated that other nations should "respect China's judicial sovereignty and not do things that will interfere in China's internal affairs".

China reacted negatively to the award, immediately censoring news about the announcement of the award in China, though later that day limited news of the award became available. Foreign news broadcasters including CNN and the BBC were immediately blocked, while heavy censorship was applied to personal communications. The Chinese Foreign Ministry denounced the award to Liu Xiaobo, saying that it "runs completely counter to the principle of the award and it is also a desecration of the Peace Prize". The Norwegian ambassador to the People's Republic of China was summoned by the Foreign Ministry on 8 October 2010 and presented with an official complaint about the granting of the Nobel Peace Prize to Liu. The Chinese government has called Liu Xiaobo a Criminal and stated that he does not deserve the prize. Chinese dissident Wei Jingsheng, in his response to news of the award, criticized Liu by calling him "the accomplice of the Communist regime."

On 20 March 2011, the international literature festival called for a worldwide reading for Liu Xiaobo. More than 700 authors from all continents signed the appeal and over 150 institutions took part in the event.

On 19 November 2013, his wife, Liu Xia, who was placed under house arrest shortly after Liu Xiaobo was awarded the Nobel Peace Prize, filed an appeal for Liu Xiaobo's retrial. This move has been called "extraordinary" because the action could refocus the world's attention on China's human rights record. According to her attorney, Mo Shaoping, Liu Xia visited her husband in Jinzhou Prison in Liaoning and gained his approval before filing this motion.

 Tibet: The 14th Dalai Lama, who himself is the 1989 Nobel Peace Prize winner, the Speaker of the Tibetan Parliament-in-Exile, Khenpo Sonam Tenphel, and Prime Minister of the Tibetan Government-in-Exile, Lobsang Sangay mourned the death of Liu. The Dalai Lama issued the following short statement on 14 July 2017, "I am deeply saddened to learn that fellow Nobel Laureate Liu Xiaobo has passed away while undergoing a lengthy prison sentence. I offer my prayers and condolences to his wife, Liu Xia and to other members of his family. Although he is no longer living, the rest of us can best pay honor to Liu Xiaobo by carrying forward the principles he has long embodied, which would lead to a more harmonious, stable and prosperous China. It is my belief that Nobel Laureate Liu Xiaobo's unceasing efforts in the cause of freedom will bear fruit before long."