Hou Xuan was a minor warlord of Liang Province, and he became one of the Eight Riders serving under Han Sui. In 211 AD, when Cao Cao went to attack Zhang Lu of Hanzhong, Han Sui and Ma Chao believed that Cao Cao was intending to attack Liangzhou and seize it for himself, so Hou Xuan answered their call for generals and assisted them in capturing Cao Cao's secondary capital of Chang'an. When Cao Cao engaged the Xiliang coalition at the Battle of Tong Gate, Hou Xuan was one of the officers accompanying Han Sui to his meeting with Cao Cao. During the meeting, Cao Hong loudly spoke of Han Sui's meetings with Cao Cao, making Ma Chao suspicious of Han Sui. Han Sui later defected to Cao Cao when Ma Chao accused him of treason, but Hou Xuan later joined Ma Chao in fleeing to Hanzhong, where they began service under Zhang Lu. He stayed with Zhang Lu until Cao Cao conquered Hanzhong in 215 AD at the Battle of Yangping Gate, and Hou Xuan surrendered to Cao Cao with Yang Qiu, while Ma Chao fled to Liu Zhang and then to Liu Bei. He was given an office in Weikou with Yang Qiu and a noble rank, and he served as one of Cao Cao's commanders.