Literature of the Yuan dynasty has not a long history, but its development trend is worth special attention. In Yuan dynasty, narrative light literature witnessed considerable development. Zaju opera was the first new force suddenly rising, whose emergence marked the maturity of Chinese opera. Sanqu was a new poetic style popular in Yuan dynasty. Though Sanqu can be lyric and narrative, it is normally treated as a narrative style. Zaju and Sanqu are collectively called Yuan opera, the main body of literature in Yuan dynasty. However, Zaju opera far exceeds Sanqu in achievements and influences, so some refers to "Yuan opera" exclusively as Zaju. Yuan opera means opera of Yuan dynasty.

There are two direct origins of Zaju in Yuan dynasty: one is a storytelling and singing art form from the Song dynasty to the Jin dynasty-Zhu Gongdiao; the other is a playlet form that focuses on making fun-Zaju of Song dynasty and performers' scripts of the Jin dynasty. Zaju of the Yuan dynasty is evolved by inheriting characteristics of performers' scripts of Jin dynasty, combining many features of Zhu Gong Diao and absorbing elements from other folk crafts. After its formation, Zaju quickly became popular in northern China. Representative writers of Zaju like Guan Hanqing, Wang Shifu, Ma Zhiyuan, Bai Pu and Ji Junxiang, and most famous works like Injustice of Dou E, Romance of Western Chamber, Fall in the Palace of the Han, Parasol Rain, Over the Wall, On the Horse and Orphan of the Zhao Family appeared in this period.

The play script for Zaju of the Yuan dynasty comprises four acts and a xiezi. At the very beginning, "zhe" (act) referred to the section from the point any character went on the stage to the point he/she went off the stage. It was not until the Ming dynasty that the phases of Yuan Zaju were clearly defined, and a suite of music of the same gong diao was taken as one zhe, so "zhe" is also a musical unit. One script four zhes means that in a play, four suites of music with actions and spoken parts in between constitute four phases in the development of the plot, namely setup, development, climax and resolution. There are a few Zaju works that break the rules of one script four zhes because of the intricate plot, such as the Romance of Western Chamber. Some Zaju works also include a xiezi, which originally means a piece of wood inserted into the tenon of a wood ware to make it tight. In Yuan Zaju, xiezi is placed before the first zhe as the prelude, or between zhes as an interlude.

The division of roles in Zaju of the Yuan dynasty is quite different from that in Zaju of the Song dynasty and performers' scripts of the Jin dynasty. The principal characters in a play are called "zheng se". The hero is called "zheng mo", and the heroine "zheng dan". Besides mo (role of middle-aged man in classical opera) and dan (female character type in Chinese opera), there are fu mo (deputy mo), tie dan (deputy dan), jing (actor with a painted face), gu (official) and bu er (old women), etc. In Zaju, only major roles have librettos. "Mo ben" is the term for the libretto of zheng mo, and "Dan ben" is the term for the libretto of zheng dan. Other roles have actions and spoken parts, but no libretto.

Lyrics are the main part of Zaju of the Yuan dynasty, and the core of lyrics is libretto. A zhe is made up of a suite of music of the same gong diao, and the same rhyme goes through the zhe. Four zhes can use four different gong diaos. Each gong diao has its own tonality and the gong diaos in the four zhes change with the development of the plot. Besides lyrics, binbai (spoken parts in the play) and kefan (stage instructions for acts, expressions and effects during the performance) are also major constituent elements of zaju.

Sanqu, as opposed to juqu, was lyrics popular during the Jin and Yuan dynasties and a new poetic style rising after poem and ci. In the literary world of the Yuan dynasty, it was equal to traditional poem and ci forms, and represented the highest merits of poetic creation of that time. Qu evolved from ci. By the Yuan dynasty, ci had been completely independent from music and became pure literary creation.

Sanqu includes two types, namely xiaoling and taoshu. Xiaoling is made up of a single piece of music. The lines are not uniform in length, but have certain format. Taoshu (divertimento), also called "santao", comprises over two pieces of music of the same gong diao. It is similar to taoqu in Zaju. Sanqu is very different with poem and ci in metrical pattern and style. Some sanqu works are elegant and graceful, and some bold and incisive. Elegance, forthrightness, pungency, humorousness and coarseness are characters of qu different from that of poem and ci, and the inherent qualities of qu. In the early Yuan dynasty when sanqu had just risen and had not become a major genre in the poetic circles, writers of sanqu were mostly dramatists or poets, such as Guan Hanqing, Baipu, Ma Zhiyuan, Lu Zhi, Yao Sui and Feng Zizhen. Among them, the works of Feng Zhiyuan and Lu Zhi were the largest in number and more influential. By the late Yuan dynasty, sanqu had become a major genre in the poetic circles and specialty of many literati. A number of sanqu writers appeared, such as Zhang Kejiu, Qiao Ji, Zhang Yanghao, Sui Jingchen, Liu Shizhong, Guan Yunshi and Xu Zaisi.