In her early days Liu worked as a farm labourer, then as a propagandist for the People's Liberation Army and later a stage actor for the Chengdu Military Drama Group.

Liu acted in mainland Chinese films before she turned 30 — The Great Wall of the South China Sea (1976), What a Family (1979) and The Little Flower (1980). Her breakthrough role was the ruthless Qing Dynasty Empress Dowager Cixi in The Burning of the Imperial Palace (1983) and Reign Behind the Curtain (1984). Her portrayal of Cixi won her numerous awards in Chinese film festivals and she later reprised the role in two unrelated films, including Li Lianying: The Imperial Eunuch (1991). She won Best Actress at the Hundred Flowers Award for her role as Hua Jinzhi in The Savage Land, filmed in 1981 but not released until 1987, and again for her role in Hibiscus Town (1986). She holds a record for having won the most number of awards in the actress categories of the Hundred Flowers Award, with three Best Actress and one Best Supporting Actress.