Northwest Territory, in United States history, the territory created by the Ordinance of 1787. It was officially termed the Territory Northwest of the River Ohio, and was often called the Old Northwest. The area took in what is now included in Ohio, Indiana, Illinois, Michigan, Wisconsin, and part of Minnesota. Most of the territory belonged to France until 1763, when it passed to Great Britain. By the Treaty of Paris of 1783, which ended the Revolutionary War, Great Britain recognized this area as part of the United States.

Originally, the states of Virginia, Massachusetts, and Connecticut claimed parts of this territory under provisions in their colonial charters; New York also had claim based on an Indian cession. These clams were gradually surrendered, with minor exceptions, between 1780 and 1802. The western territory then became public domain of the United States.

Congress developed national policy toward the western lands by enacting three ordinances. The Ordinance of 1784 provided for the division of the territory into 16 districts and set criteria for their entrance into the Union. The Ordinance of 1785 established a systematic method of surveying and subdividing the western lands. The ordinance set aside one section in each township for the maintenance of public schools.

The Ordinance of 1787, often called the Northwest Ordinance, superseded the Ordinance of 1784. It established a territorial government through agents appointed by Congress and provided that when the territorial had 5,000 adult free males it should have a representative legislature. The ordinance also provided that the territory should be divided into not less than three nor more than five states. As soon as any area had 60,000 free inhabitants, it was to be admitted into the Union "on an equal footing with the original States in all respects whatever."

The ordinance contained several "articles of compact," which should "forever remain unalterable, unless by common consent." The first article provided for full religious freedom; the second, for civil rights and liberties. The ordinance provided further that "schools and the means of education shall forever be encouraged," and that "there shall be neither slavery nor involuntary servitude in said territory."

This ordinance has been called the most notable law ever enacted by a representative body in the United States. It established the principle that territorial colonies should be admitted into the Union as member states, equal in every way to the original states.

Arthur St. Clair became governor in 1788 and served until 1802. His capital was at Marietta (now in Ohio). The first territorial legislature met in 1799. The capital was then moved to Chillicothe.

In 1800 the territory was divided into two parts. The larger part was named Indiana Territory; it included the present states of Illinois and Wisconsin, most of Indiana, and parts of Michigan and Minnesota. The much smaller part, still called Northwest Territory, included Ohio, a small part of Indiana, and half of Michigan. The Indiana and Michigan portions were detached from the smaller part in 1803, when Ohio was admitted into the Union.