After the fall of Jinan to the Communists on 24 September 1948, the PLA began planning for a larger campaign to engage the remaining Nationalist forces in the Shandong province and their main force in Xuzhou. In face of the rapidly deteriorating military situation in the Northeast, the Nationalist government decided to deploy on both sides of the Tianjin–Pukou Railway to prevent the PLA from advancing south toward the Yangtze River.

Du Yuming, the commander of the Nationalist garrison in Xuzhou, decided to attack the Central Plains Field Army and capture the key railway checkpoints to break the siege on the Seventh Army. However, Chiang Kai-shek and Liu Zhi overruled his plan as being too risky and ordered the Xuzhou Garrison to rescue the 7th army directly. The communists anticipated this move from good intelligence and correct reasoning, deployed more than half of the Eastern China Field Army to blocking the relief effort. The 7th army managed to hold out for 16 days without supplies and reinforcement and inflicted 49,000 casualties on the PLA forces before being destroyed.

With the Seventh Army no longer in existence, the east flank of Xuzhou were completely exposed to Communist attack. The Communist sympathizer in the Nationalist government managed to persuade Chiang to move the Nationalist headquarters to the south. In the meanwhile, the Communist Central Plains Field Army intercepted the Nationalist Twelfth Army led by Huang Wei coming from Henan as an reinforcement. General Liu Ruming's Eighth Army and Lieutenant General Li Yannian's Sixth Army tried to break the Communist siege but to no avail. The Twelfth Army also ceased to exist after nearly a month of bloody conflicts, with many newly taken Nationalist prisoners of war joining the Communist forces instead. Chiang Kai-shek tried to save the 12th army and ordered the three armies still under the Suppression General Headquarters of Xuzhou Garrison to turn southeast and relieve the 12th army before it was too late on November 30, 1948. However, the PLA forces caught up with them and they were encircled only 9 miles from Xuzhou.

On December 15, the day which the 12th army was wiped out, the 16th army under General Sun Yuanliang broke out from the communist encirclement on its own. On January 6, 1949, communist forces launched a general offensive on the 13th army and remnants of the 13th army withdrew to 2nd army's defense area. The 6th and 8th armies of ROC retreated to the south of Huai river, and the campaign was over.

As the PLA approached the Yangtze, the momentum shifted completely toward the Communist side. Without effective measures against PLA advance across the Yangtze, the Nationalist government in Nanjing began losing their support from the United States, as American military aid gradually came to a stop.