Progressive legislation continued to be enacted in the early 1900's under Republican governors. Among the laws passed were those regulating child labor, civil service, working hours for women, and coal-mine safety. After World War I, construction was begun on a statewide system of paved roads and on the Illinois Waterway, connecting Lake Michigan with the Mississippi. As the industrial north and fertile central section prospered, southern Illinois suffered an economic decline, partly because the demand for soft coal had decreased. After World War II, a program was undertaken to industrialize the area. In the 1950's, land values increased in southern Illinois as a result of improved farming methods and rising demand for oil, which had been discovered in the region prior to the war.

During the 1950's and 1960's, the stockyards were closed after it had become too costly to ship livestock as far east as Chicago. Also, the number of farms decreased. Nevertheless, Illinois remained one of the leading states in agricultural production. During the late 1960's and early 1970's, racial problems affected most of the state's large cities as the black urban population increased.

The state's industrial and population growth of the 1960's led Illinois to thrive through the 1980's, but not without consequences. Chicago continued to be a hub of activity, and high-technology industries thrived, but air and water pollution led to a voter-approved $750 million bond issue in 1970 to fight those problems, and higher taxes were needed to pay for more public services.

A new constitution, effective July 1, 1971, modernized the government. To gain additional revenue, a state-run lottery was introduced in 1974 and riverboat gambling was legalized in 1990. In the summer of 1993, severe flooding along the Mississippi caused widespread damage.

Governor George Ryan, disturbed by the state's record of wrongful death-penalty convictions, suspended the penalty indefinitely. Ryan's suspension followed legislative reviews of the punishment system and his own reduction of the punishments of 167 prisoners awaiting execution. Governor Rod Blagojevich continued Ryan's moratorium when his term began in 2003 while he heavily reformed the capital punishment system.