Cattle and sheep ranching developed in Montana shortly after the gold rush began. The cattle business flourished with the opening of the railways in 1881–83, but in the severe winter of 1886–87 more than half the range cattle in the state died. Meanwhile, lumbering had developed into a thriving industry in the western region.

Montana became the 41st state in 1889. The mining and lumbering industries were being brought under the control of large corporations, and labor unrest developed. From the time the Industrial Workers of the World (I.W.W.) was organized in 1905, Montana had incidents of violence and major strikes, continuing up to World War I.

Oil and natural gas were discovered in eastern Montana in the 1920's but not developed until after World War II. An oil boom got under way in the early 1950's and was followed by a coal boom in the early 1970's. During the 1970's, there were many legal battles between conservationists, seeking to preserve the state's undeveloped areas, and various business interests. In the 1980's and early 1990's, the state's economy suffered with a downturn in the oil, coal, metals, and logging industries. In the late 1990's the economy recovered, aided by strong growth in the recreation industry.

The state legislature deregulated the generation and sale of electric power in 1997. Officials believed that this change would bring lower rates for customers and increase competition among electric companies. Electric costs and services again became a concern in the early 2000's when the state's largest electric company sold off its major parts.

Judy Martz became the first female governor of Montana in 2000 and served until 2005.