The economy slowly improved in the early 1900's, as farm production increased. By 1910, agriculture had replaced mining as the state's most important industry. The rise of agriculture was based largely on better irrigation methods and the cultivation of sugar beets. The economy was also helped by construction of highways that made the mountain areas of the state more accessible and by the establishment of large national parks (Mesa Verde in 1906 and Rocky Mountain in 1915), which brought tourist revenue.

Prosperity returned with World War I, as demand rose for products from Colorado's mines, farms, and ranches. The economic boom, however, was short-lived. In the postwar period, prices for grain and livestock fell and the demand for coal and industrial metals dropped significantly. Manufacturing suffered because it mainly involved the processing of foods and minerals. During the 1920's, the rate of population growth slowed. Also, there was a rise in extremist, ultraconservative politics, a phenomenon occurring in many other parts of the country as well. This reactionary political atmosphere allowed the Ku Klux Klan to become a power in Colorado and influence the selection of the governor and the state legislature in the 1924 election.

The Great Depression of the 1930's led to more economic hardships, which were intensified by prolonged drought in eastern Colorado—part of the region that came to be known as the Dust Bowl. Many farms were abandoned, and their owners moved to California. World War II brought military training camps, airfields, and jobs. The state again, as in World War I, provided food and metals for the war effort. Manufacturing expanded rapidly; existing facilities increased their capacities and new plants were built. By the mid-1950's, manufacturing had surpassed agriculture as Colorado's leading economic activity.

During the 1950's and 1960's, a number of federal agencies established regional offices in the state, and several large military installations were constructed near Denver and Colorado Springs, including the U.S. Air Force Academy. Extensive flood control, irrigation, and water-storage projects were undertaken. Colorado's attractiveness as a year-round vacation spot led to a boom in tourism.

By the early 1970's, the expanding population—it had doubled since World War II—was a matter of concern to state officials, who feared the problems caused by rapid and unplanned growth. Much of the expansion had taken place in a 120-mile (190-km) corridor that included Denver, its suburbs, Colorado Springs, Boulder, Greeley, and Fort Collins. Also of concern was the environmental threat caused by increased industrialization. Environmental protection versus expanded development became the major issue of the 1970's and 1980's. In 1976, the Big Thompson River flooded vacation and residential areas near Loveland and killed over 135 people.

The end of the Cold War led to layoffs at defense-related businesses in Colorado and to the closure of some of the state's military installations in the 1990's.

In 1999, Colombine High School in Littleton was the scene of one of the worst school shooting sprees in U.S. history.

As of the early 2000's, Colorado is one of the fastest growing states, but also has many challenges ahead such as increasing air and water pollution, overcrowding along the eastern edge of the Rocky Mountains, and urban decay.