At the time of European exploration, South Dakota was inhabited by Native Americans of the agricultural Arikara and the nomadic Sioux (Dakota). By the 1830s the Sioux had driven the Arikara from the area. Part of the region that is now South Dakota was explored in the mid-18th cent. by sons of the sieur de la Vérendrye. The United States acquired the region as part of the Louisiana Purchase, and it was partially explored by Lewis and Clark in their Missouri River expedition of 1804–6. Later explorers became well acquainted with the warlike Sioux, who continued to dominate the region from the period of the fur trade until to the middle of the 19th cent. Individual traders from the time of Pierre Dorion in the late 18th cent. made the region their home, and the posts founded by Pierre Chouteau and the American Fur Company were the first bases for settlement. (Fort Pierre was established in 1817.)
It was not until land speculators and farmers moved westward from Minnesota and Iowa in the 1850s that any significant settlements developed in South Dakota. Two land companies were established at Sioux Falls in 1856, and in 1859 Yankton, Bon Homme, and Vermillion were laid out. A treaty with the Sioux opened the land between the Big Sioux and the Missouri, and in 1861 Dakota Territory was established, embracing not only present-day North and South Dakota but also E Wyoming and E Montana. Yankton was the capital. Settlers were discouraged by droughts, conflicts with the Native Americans, and plagues of locusts; however, by the time the railroad pushed to Yankton in 1872, the region had received the first of the European immigrants who later came in great numbers, contributing significant German, Scandinavian, and Russian elements to the Dakotas.
Rumors of gold in the Black Hills, confirmed by a military expedition led by George A. Custer in 1874, excited national interest, and wealth seekers began to pour into the area. However, much of the Black Hills region had been granted (1868) to the Sioux by treaty, and when they refused to sell either mining rights or the reservation itself, warfare again broke out. The defeat (1876) of Custer and his men by Sitting Bull, Crazy Horse, and Gall in the battle of the Little Bighorn (in what is now Montana) did not prevent the whites from gradually acquiring more and more Native American land, including the gold-lined Black Hills.
The near extinction of the buffalo herds, Sitting Bull's death (1890) at the hands of army-trained Native American police, and the subsequent massacre of Big Foot's band at Wounded Knee Creek were among the factors leading to the permanent end of Native American resistance in South Dakota. Tribal organization was weakened by the Dawes Act of 1887. Although the Indian Reorganization Act of 1934 attempted to restore tribal ownership of repurchased lands, younger generations have moved to the cities in increasing numbers. During the 1870s the gold fever mounted; Deadwood had its day of gaudy glory, Wild Bill Hickok and Calamity Jane created frontier legends, and the town of Lead began its long, productive history.
Although gold did not make the fortune of South Dakota, it laid the foundation by stimulating cattle ranching—herds of cattle were first brought to the grasslands of W South Dakota partly to supply food for the miners. Settlement in the east also increased and the period from 1878 to 1886, following the resumption of railroad building after the financial depression earlier in the decade, was the time of the great Dakota land boom, when the region's population increased threefold.
Agitation for statehood developed; in 1888 the Republican party adopted the statehood movement as a campaign issue, and in 1889 Congress passed an enabling act. The Dakotas were separated; South Dakota became a state with Pierre as capital. Disasters, however, rocked its security. The unusually severe winter of 1886–87 had destroyed huge herds of cattle in the west, ruining the great bonanza ranches and promoting among the ranchers the trend—dominant ever since—of having smaller herds with provisions for winter shelter and feeding. Cattle grazed on public land and were rounded up only for branding and shipment to market.
Recurrent droughts added to the difficulties of the farmers, who sought economic relief in the cooperative ventures of the Farmers' Alliance and political influence in the Populist party, which won a resounding victory in 1896. Initiative and referendum were adopted (1898; South Dakota was the first state to adopt them) and other progressive measures of the day were enacted. However, prosperity resumed, and with it South Dakota quickly returned to political conservatism and the Republican party.
The extension of railroads (particularly the Milwaukee, which was the only transcontinental line passing through South Dakota) encouraged further expansion of agriculture, but new droughts (especially that of 1910–11) brought a brief period of emigration. Many new farmsteads were abandoned, and a turn toward political radicalism developed. The Progressive party, led by Peter Norbeck (governor 1917–21) and operating as a branch of the Republican party, revived the attempts of Populist reform programs to regulate railroad rates and raise assessments of corporate property. The Progressives also entered into experiments in state ownership of business.
Prosperity-depression cycles again affected the state after the boom of World War I. The combination of droughts and the Great Depression brought widespread calamities in the late 1920s and early 30s, and the state's population declined by 50,000 between 1930 and 1940. Vigorous relief measures were instituted under the New Deal, and higher farm prices during World War II and the ensuing years brought a new era of hopefulness.
The 1950s began a period of Democratic strength in state politics. George McGovern was elected to the House of Representatives in 1956 and to the Senate in 1962, 1968, and 1974. In 1972 McGovern ran unsuccessfully for president. In 1973 the American Indian Movement led a 71-day occupation of Wounded Knee that included gun battles with federal marshals; the occupation was in part a protest over the issue of broken treaties.
In the postwar period the adoption of improved farming techniques resulted in a steady increase in agricultural and livestock production. This was accompanied, however, by the consolidation of small farms into large units and the displacement of many small farmers. Irrigation projects, extension of hydroelectric power, and protective measures against wind and water erosion have been implemented, avoiding the threat of new disasters. In 1981 a major New York bank relocated its credit-card operations to Sioux Falls, marking the beginning of the state's shift toward service, finance, and trade industries that, in turn, has resulted in significant economic growth. Some casino gambling was legalized in 1989 and tourism continues to be one of the state's top sources of income.