Industrialization continued after the war, and large numbers of immigrant laborers settled in Connecticut. Many had come from the Catholic countries of Europe and Connecticut's population, traditionally Anglo-Saxon and Protestant in character, became more mixed.

As a result of a referendum, Hartford became the sole capital of the state in 1875. During the late 19th century, Connecticut was a leader in the passage of labor reform legislation. A law establishing eight hours as the maximum workday had been passed in 1867. Additional enactments in the last decades of the century included a prohibition of child labor, a factory inspection act, and a law affirming the right of employees to join labor unions. World War I accelerated industrialization and the growth of urban areas. During the Great Depression of the 1930's, social reform measures were enacted, including one of the earliest anti-discrimination laws.

World War II brought an economic boom to Connecticut. In 1954, the world's first nuclear-powered submarine, the Nautilus, was launched at Groton, and in the 1960's the aerospace industry developed rapidly. By the 1960's, both New Haven and Hartford had initiated successful slum clearance and urban renewal programs. Both cities, however, were the scenes of racial disturbances in the late 1960's, as were a number of other Connecticut cities.

A new constitution was adopted in 1965. Among its provisions was a new electoral redistricting plan, which led to the end of the traditional domination of the state legislature by the rural areas. In the late 1960s and early 1970s, Connecticut also started programs based on new laws to lower air and water pollution levels, and as of 1979 new power plant construction was prohibited. In 1974, Connecticut elected its first woman governor, Congresswoman Ella T. Grasso; she was reelected in 1978. The 1980's were a time of general economic stability and prosperity in the state. However, in the early 1990's, there was an economic downturn. From the early 1970s into the early 1990s, the state established several new sources of revenue for itself. Some taxes were raised, several forms of gambling were permitted, and an individual income was started in 1971; it was repealed after initial protests but, then started again in 1991.

In 2004, Governor John Rowland resigned from office after public pressure following a 2003 admission of corruption in state business. Later that year, he pleaded guilty and was sentenced to a fine and a year-long prison term.