This paper focuses on pointing out that the development and transformation of Yan Fu's views on Chinese and Western cultures throughout his life in fact had their own rationale and followed an inexorable route. We should not jump to the conclusion that his latter ideas were inconsistent or contradicting to the earlier ones. Instead, we should discreetly consider them as a series of uninterrupted developments evolving along the same route of his ideological and spiritual conviction. All along, Yan believed that despite the divergence between Chinese and Western cultures, each had its own value of existence and outlook of growth. He believed that besides having a proper knowledge of the merits and strong points of Western culture, we must also aware of its deviations and shortcomings. For the same reason, in addition to a sober understanding of the long-standing malpractice and chronic maladies of traditional Chinese culture up to the first two decades of the 20th century, we should also endeavour to investigate into the virtues and treasures endowed in this culture. This is the philosophy underlying Yan's evaluation of the two great cultures, which he upheld throughout his life. For all his life, Yan was deeply concerned of the fate and the well-being of the Chinese nation. He was an enthusiastic patriot. In his old age, this aspiration was particularly strong. All along, he believed that if China had to become prosperous and powerful and free from being invaded by foreign powers, the most proper and effective way was to improve and upgrade the quality of its people. Therefore in his old age he still held on to his enduring conviction of saving the nation by means of education and enlightening the people. He was the first thinker in modern China to delve into cultural characteristics to find out the similarities and diversities, strong and weak points of the Chinese and Western cultures. He always held a rational and impartial attitude towards the criticism of these two cultures. In his late years, Yan's knowledge and understanding of the two cultures became even more profound. His views on the strong and weak points of the two cultures, what to take and what to reject became further mature. Armed with sound knowledge and correct understanding of the true value of the Chinese and Western cultures, and having the ability to make proper evaluation and illumination, Yan Fu was known to be the foremost thinker with the greatest contribution to China in the first two decades of the 20th century.