Oregon's most critical need in its early years was overland transportation to connect it with the rest of the country. This was supplied in 1883 with the junction of the Northern Pacific Railroad and an Oregon line, the Oregon Railway and Navigation Company, near the mouth of the Snake River. The next year, connection was made with the Union Pacific. Completion of the transcontinental railroad led to Oregon's first major boom. The period from 1880 to 1890 saw population, property values, and agricultural and lumber production rise significantly. Grants of land offered to settlers by the railroads led to an increase in population from some 175,000 to more than 300,000 during 1880–90.

The state's first export product was wheat, which was first grown principally in the Willamette Valley, and then also in eastern Oregon. Cattle raising was the main livestock industry from the 1860's. By 1890, however, the number of sheep raisers had increased to the point where a bitter rivalry developed over the use of rangelands. This competition erupted in the mid-1890's into a bloody conflict known as the Sheepshooters War, which lasted for a decade.

The expansion of sheep raising led to the establishment of several wool mills, with Pendleton becoming a major wool market. The canning of salmon, begun in 1866, grew steadily for almost 70 years. Lumbering had its start during the gold rush, and expanded after 1890.

State politics in the late 19th century was controlled by the cattle “barons," timber companies, railroads, and utilities; corruption and fraud were widespread. In the early 1900's, reformers led by William S. U'Ren secured adoption of a series of reform measures, among them the initiative and referendum (1902), direct primary (1904), and recall (1908). These laws represented the first enactment in the nation of a system of direct voter participation in lawmaking. The Oregon System, as it was called, was later adopted by many other states.

The early 1900's were another period of economic boom for the state, but prosperity had begun to fade by the start of the second decade. World War I (1914–18), however, provided new markets for Oregon's farms, mills, and factories. The Great Depression of the 1930's brought falling farm prices and widespread industrial unemployment, especially in lumbering. Recovery was aided by hydroelectric projects, many undertaken by the federal government, and by the onset of World War II, which led to increased agricultural and industrial production.

Hydroelectric units completed in 1943 at Bonneville Dam supplied the abundant, cheap power needed to attract industry to the state. Many companies that built plants here during World War II retained their Oregon sites for postwar manufacturing, and new industries moved in. Further construction on the vast Columbia Basin project provided additional sources of power. An important transportation facility, the Astoria bridge, spanning the mouth of the Columbia River, was constructed during 1962–66. The state suffered its greatest natural disaster in December, 1964, when massive floods struck.

In the 1970's. Oregon was one of the states in the forefront in dealing with such problems as the energy shortage, environmental pollution, and unrestricted growth. During the early 1980's, the state's economy, with its heavy dependence on the lumbering and wood-products industry, was hard hit by a decline in construction activity. By the late 1980's, however, the economy had improved significantly, the result of growth in the service and retail trade sectors. In 1990 Barbara Bowers, a Democrat, became the first woman to be elected governor of the state.

In 1994, voters in Oregon approved a referendum allowing physician-assisted suicide. A second, modified referendum was approved in 1997 and the law went into effect in the following year, making Oregon the first state to allow physicians to assist patients in ending their lives.