He hailed from Changyi 昌邑 (modern Jinxiang 金鄉, Shandong). When Chen Sheng 陳勝 and Xiang Liang 項梁 rose in rebellion against the Qin dynasty 秦 (221-206 BCE), he joined. Later, after Xiang Yu 項羽 had established his rule as hegemonial king in 206, Peng Yue joined the forces of Liu Bang who made him general. For his conquest of the region of Wei 魏 (approx. modern Henan) he was made princely counsellor (xiangguo 相國) of the kingdom of Wei.
During the war against Xiang Yu he was able to cut off several times the supplies of Xiang, a merit for which he was by Liu Bang given the title of Marquis of Jiancheng 建成侯. In 202 he took part in the decisive battle against Xiang Yu at Gaixia 垓下 (modern Lingbi 靈壁, Anhui). He was invested as King of Liang 梁, with the capital Dingtao 定陶 (modern Dingtao, Shandong).
In 196 he conspired against Liu Bang and was arrested, but later set free, demoted to a commoner and banished to Shu 蜀 (modern Sichuan). Empress Lü 呂后, in care the the dynasty, had him denounced of further rebellion, so that he was again arrested and executed.