He established a court, adopted the insignia of the empire, conferred patents of nobility, and issued gold, silver, and copper coins, bearing his image, and the inscription: "Peter the Third, Emperor of all the Russias." But as the adventurer became powerful, he cast off the mask, and dissipated the confidence of his followers by his debauchery and contempt for religious observances. His natural ferocity, no longer under curb, was exercised upon his opponents, whom he mercilessly massacred without respect to sex or age.
Catherine and her advisers, no longer able to treat this rebellion as the marauding expedition of a gang of robbers, were compelled to make the most strenuous efforts to meet the impostor's forces. An army of veterans, chiefly recalled from the Turkish campaign (then being prosecuted), and numbering forty-five thousand men, aided by a formidable train of artillery, took the field under the command of an experienced general. Proclamations were issued, offering a pardon to all who returned to their allegiance, and proffering a reward of one hundred thousand silver roubles for the person of Pugatchef, alive or dead. The pretender, in return, circulated manifestoes, in which he abolished servitude, freed unconditionally all the serfs, and created them proprietors of the soil which they tilled. This was an attack upon the empire's weakest point; and had the insurgent leader been as prudent as he was daring, he might easily have overturned the existing government.
During the spring of 1774, victory, followed by the most terrible excesses, hovered between the two opposing powers, until at last Palitzin, the imperial general, completely routed Pugatchef, and drove him into the fastnesses of the Ural mountains. Just as the Empress and her courtiers were congratulating themselves upon the supposed annihilation of the rebellion, however, the claimant reappeared with recruited strength, and again obtained many successes. Again was he routed and driven back, and again did he return with fresh armies to renewed victories. Once more repulsed, he was still enabled, for the fourth time, to gather together fresh legions of insurgents, who seemed to spring into being at his call. But his strength was nearly spent; his experienced men had been destroyed; his new recruits were ill-armed and untrained serfs, whilst peace with Turkey enabled the Empress to concentrate all her strength for a crushing blow. Pugatchef advanced along the banks of the Volga towards Moscow, committing the most terrible atrocities at the various places he captured. Aware that the late Czar, whom he still personified, spoke German, he carefully executed any of his prisoners who owned to a knowledge of that language. Finally, surprised by the Imperial troops, his hordes were routed with great slaughter, and he himself narrowly escaped by swimming across the Volga, and gaining the almost inaccessible steppes of the Ural. Attended by three followers only, he lurked about for some time, until at last betrayed and handed over to a Russian general. Sent to Moscow, he was tried with all possible formality, condemned, and executed on January 21st, 1775, having previously, according to official report, confessed his real name, and been recognized by his relatives. Thus ended one of the most daring impostures on record, after having cost the empire upwards of a year's panic and confusion, an enormous loss of property, and, worse than all, the sacrifice of at least three hundred and fifty thousand lives.