Minnesota Territory experienced a boom period starting in 1855. Industry flourished region-wide and companies amassed incredible wealth. The Financial Panic of 1857 brought the good times to a halt and interrupted the growth of the fledgling state.

In 1855, a federal treaty moved the Ho-Chunk (Winnebago) people from their reservation near Long Prairie to a site along the Blue Earth River. The Ho-Chunk farmed the area's rich soil with some success but drew the hostility of settler-colonist neighbors who wanted the land for themselves. Though they did not participate in the U.S.–Dakota War of 1862, they were exiled from Minnesota during the conflict's aftermath.

In 1848 the U.S. government removed the Ho-Chunk (Winnebago) from their reservation in the northeastern part of Iowa to Long Prairie in Minnesota Territory. The Ho-Chunk found the land at Long Prairie a poor match for their needs as farmers. In 1855 they were moved again, this time to a reservation in southern Minnesota.

From their state's admission to the Union until the mid-1860s, a majority of Minnesotans advocated the abolition of slavery in the South. African American suffrage, however, did not enjoy the same support. Minnesota's African American citizens paid taxes, fought in wars, and fostered their communities. But they could not vote, hold political office, or serve on juries. This continued until 1868, when an amendment to the state's constitution approved suffrage for all non-white men. The amendment did not apply to African American women, however, who continued to be disenfranchised in Minnesota and the rest of the United States.

Ann Bilansky was the only woman executed by the action of Minnesota courts. She died in 1860, but doubts about her guilt remain alive.

In the early morning of June 2, 1895, Houston Osborne, a young African American man, broke into Frieda Kachel's bedroom in her St. Paul home. When Kachel screamed, Osborne ran; he was caught and hanged from a cottonwood tree but let down while he was still alive. He died in prison eighteen months later.

In July 1902, St. Paul hosted the most important African American political event of the year: the annual meeting of the National Afro-American Council (NAAC). St. Paul lawyer Fredrick McGhee organized it and hoped that it would produce a more united and effective national civil rights organization. The opposite occurred.

The last in a series of violent conflicts between Dakota and Ojibwe people took place on the banks of the Minnesota River north of the village of the Dakota leader Shakpedan (Little Six) on May 27, 1858. Dozens of Ojibwe and Dakota warriors engaged in fighting that claimed lives on both sides but produced no clear victor.

In 1857, elected delegates met in St. Paul to draft a state constitution so that Minnesota could officially join the Union. Due to a bitter rivalry, Democrats and Republicans refused to meet jointly until near the end of the convention. Finally, a Compromise Committee with five members from each group proposed language that both sides accepted. Yet they refused to sign the same document. As a result, Minnesota has two copies of its constitution: one Democratic and one Republican.

In 1854 legislators in St. Paul requested a grant from the federal government to create a rail line across Minnesota Territory. Public outcry led to scandal and the repeal of the territory's first land grant bill.