After the Civil War Iowa entered an era of railway building that resulted in a network connecting every part of the state. Most of Iowa's population at this time was engaged in agriculture. During the hard times of the 1870's and 1880's, farmers' organizations such as the Grange were established and resulting political movements such as Populism gained favor. Corn gradually replaced wheat as the leading crop, and hogs became a major product.

As agriculture was mechanized, migration from the farms to the cities provided manpower for factories. With construction of the Keokuk Dam hydroelectric plant, 1905–13, Iowa entered a period of industrial growth.

Since the mid-20th century, agriculture and manufacturing have been prosperous enterprises. In the 1960's, Iowa, which had long been rural and conservative, began to become more urban and liberal. Also, a program to promote industrialization was begun. During the recession of the early 1980's, unemployment in the state, particularly in the agricultural-equipment industry, reached its highest level since the Great Depression. The economy improved in the mid-1980's. To raise revenue, the state legislature in 1989 enacted a law that allowed riverboat gambling, beginning in 1991. In 1993 floodwaters from the Mississippi and its tributaries caused extensive property damage.

State population began to increase again by 2000. According to that year's census, the population grew by 5 ½ per cent in the 1990's.