Subsequent to the fall of Goguryeo, Dae Jo-yeong, a former Goguryeo general, formed an army of Goguryeo and Malgal (a Tungusic tribe) people, and led a migration to Chinese-controlled territory. They settled eventually near Jilin in Manchuria, and there founded a state which was at first called Chin, but in 713 was renamed Balhae (Bohai in Chinese). Balhae soon gained control of most of the former Goguryeo territory. The ruling class of Balhae consisted mostly of Goguryeo (i.e. Korean) people. Balhae declared itself the successor to Goguryeo, and sometimes called itself Goryeoguk (state of Goryeo).

Balhae prosperity reached its height in the first half of the ninth century during the reign of King Seon. At that time, Balhae territory extended from the Sungari and Amur rivers in northern Manchuria all the way down to the northern provinces of modern Korea. Its capital was Donggyeong, in the Jilin area, where the state had originally been founded.

Balhae was to become a victim of the political confusion and violence which accompanied the fall of the Tang Dynasty. In 926 the Khitan, who later came to dominate much of Manchuria and northern China, conquered Balhae. Many of the ruling class, who were mostly Koreans, moved south and joined the newly founded Goryeo Dynasty, which replaced Silla at that time.

While the Manchurian portion of the Balhae territory was lost, the area south of the Amnok (Yalu)-Duman (Tumen) boundary was restored and the people migrated to Korea.