“Hsiao Yao Yu” is the outline of “Chuang Tzu”. Numerous scholars explained it since the beginning of Gao Xiang, while the interpretation of Yuan Zhong-Dao, a backbone figure of Gongan School in Ming Dynasty, was rather innovative, though it was commonly ignored by general researchers. This paper elucidated Yuan Zhong-Dao’s interpretation by analyzing “Hsiao Yao Yu, a chapter in Dao Chuang”. Yuan Zhong-Dao was a Buddhist, but he enjoyed reading “Chuang Tzu”. He was author of “Dao Chuang”, which interpreted 7 Chapters of “Chuang Tzu” with Buddhistic thought. His interpretation of “Hsiao Yao Yu” had a quite subtle elucidation on the concept of “Independence” by comparing Dependence to Greatness with Independence to Greatness. He also used “the removal of persistence” to interpret “Independence” because he believed that only by dismissing one’s prejudice in mind and persistence of behaviors could one feel relieved from surroundings, and make one’s spirit go beyond. That’s the reason that he had a peculiar point of view in his interpretation of “Hsiao Yao Yu”. However, Zhong-Dao authored “Dao Chuang” in order to promote Buddhism, which became invisible bondage. Besides, it was his failure not to interpret concepts of “states of mind of ultimate men and spirit-filled men” and “the use of uselessness”.