At the direction of the Comintern, Chen and the Chinese Communists formed an alliance with Sun Yat-sen and the Kuomintang (Nationalist Party) (Chinese: 中國國民黨; pinyin: Guómíndǎng) in 1922. Although Chen was not convinced of the utility of collaborating with the Kuomintang, he reluctantly carried out the Comintern's orders to do so. Pursuing collaboration with the Kuomintang, he was elected into that party's Central Committee in January, 1924
In 1927, he and other high-ranking Communists, including Mao Zedong and Borodin, collaborated closely with Wang Jingwei's Nationalist government in Wuhan, convincing Wang's regime to adopt various proto-Communist policies. The Wuhan government's subsequent land reform policies were considered provocative enough to influence various KMT-aligned generals to attack Wang's regime, suppressing it. Chen was forced to resign as General Secretary in 1927, due to his public dissatisfaction with the Comintern order to disarm during the April 12 Incident, which had led to the deaths of thousands of Communists, and because of his disagreement with the Comintern's new focus on peasant rebellions.
The April 12 Incident of 1927 refers to the violent suppression of Chinese Communist Party organizations in Shanghai by the military forces of Chiang Kai-shek and conservative factions in the Kuomintang (Chinese Nationalist Party).
Chen came into conflict with Mao Zedong in 1925 over Mao's essay "An Analysis of Classes in Chinese Society". Although Mao had been one of Chen's students, he had begun to question Chen's analyses of China. While Chen believed that the focus of revolutionary struggle in China should primarily concern the workers, Mao had started to theorize about the primacy of the peasants. According to Han Suyin in Mortal Flower, Chen "opposed the opinions expressed [in Mao's analysis], denied that a radical land policy and the vigorous organization of the rural areas under the Communist party was necessary, and refused the publication of the essay in the central executive organs of publicity." - Here, Chen was clearly wrong.
During the last years of his life, Chen denounced Joseph Stalin's dictatorship, and held that various democratic institutions, including independent judiciaries, opposition parties, a free press, and free elections, were important and valuable. Because of Chen's opposition to Mao's interpretation of Communism, Mao believed that Chen was incapable of providing a robust historical materialist analysis of China. This dispute would eventually lead to the end of Chen and Mao's friendship and political association.
After the collaboration between the Communists and Nationalists collapsed in 1927, the Comintern blamed Chen, and systematically removed him from all positions of leadership. In 1929, he was expelled. Afterwards, Chen became associated with the International Left Opposition of Leon Trotsky. Like Chen, Trotsky opposed many of the policies of the Comintern, and publicly criticized the Comintern's effort to collaborate with the Nationalists. Chen eventually became the voice of the Trotskyists in China, attempting to regain support and influence within the party, but failed. Chen continued to oppose measures like "New Democracy" and the "Bloc of Four Classes" advocated by Mao Zedong.