New Jersey's industrial potential was recognized by Alexander Hamilton, who picked the site of Paterson for the nation's first planned industrial city. The state was fortunate, too, in having inventors as residents. John Stevens, a pioneer in steam power, produced successful steamships. His son Robert inaugurated steam railway service in the state in the early 1830's. New Jersey was active in the building of roads and canals, so that the nearness of New York City and Philadelphia both as markets and as ports could be fully utilized. Truck farming developed in the south, and industry, greatly stimulated by the Civil War, grew in the north.

Lenient incorporation laws and low corporation tax rates attracted many large industries to the state in the late 1800's. Several of the nation's most powerful trusts and holding companies, such as Standard Oil, were organized in New Jersey. The state was also the site of scientific research and invention. Thomas A. Edison, working first at Menlo Park and then in West Orange, was the nation's foremost inventor. John P. Holland, a schoolteacher, tested his first submarine in the Passaic River in 1878 and sold the U.S. Navy its first submarine in 1900.

The growing political power of large industrialists led to a reform movement in the early 20th century. During Woodrow Wilson's governorship (1910–12), progressive legislation provided for election reforms and the regulation of corporate activities. Before the United States entered World War I, New Jersey's powder-making industry supplied vast quantities of explosives to the Allies. Blasts at munitions plants at Jersey City in 1916 and near Kingsland in 1917 were attributed to German saboteurs.

In the postwar expansion of automobile travel, the New Jersey shore became one of the country's most popular resort areas. Development of convention facilities at Asbury Park and Atlantic City drew thousands of additional visitors to the state.

Racial tension plagued New Jersey throughout the 1960's. In 1967, one of the worst race riots in United States history erupted in Newark. In the late 1960's, corruption in government became one of the state's most pressing problems. Investigations into the role of organized crime in government led to the conviction of several state and local officials in the 1970's. In the early 1980's, federal crime probes led to the conviction of U.S. Senator Harrison Williams and a number of others.

During the 1980's, unregulated development and toxic waste disposal were important environmental concerns. In the early 1990's, the state's economy was adversely affected by a nationwide recession. In 1993 New Jersey elected its first woman governor, Christine Todd Whitman, a Republican.

In 2001, Christine Whitman resigned as governor to head the U.S. Environmental Protection Agency under President George W. Bush. She held the post for the next two years.

In 2004, governor James E. McGreevey resigned following the announcement that he was a homosexual and that he had had an extramarital affair. Richard J. Codey, the state Senate president, took over the remainder of McGreevey's gubernatorial term, though Codey did retain his post in the Senate at the same time. In 2005, a state constitutional amendment formed the post of lieutenant governor, effective as of 2010.