Around 1700, the Navajo acquired Spanish livestock and by the late 1700s and early 1800s, began to shift their economic dependence to herding in addition to intensive farming, hunting, gathering, and raiding. Once acquired, sheep and goats quickly became a marker of status as well as cultural identity. The Navajo emphasis on movement and change is the foundation of their world view. Navajo mythic heroes travel restlessly from place to place in their search for sacred knowledge. The Navajo consider life itself to be a journey, and the structure of the Navajo language requires the detailed description of movement, much more so than the English language. Thus, pastoralism-with its daily demands of herding the flock from place to place and its seasonal requirements for fresh pasturage-is in keeping with the cultural values of a nomadic heritage. The Navajo became accustomed to having two homes, a summer home near their fields, and then a winter place, where they went after they had harvested their crops.

As their economy shifted toward pastoralism in the period between 1800 and 1850, the Navajo intensified their raiding of herds owned by European American settlers, which led the settlers to retaliate. The Spanish, Mexicans, and Pueblos captured Navajo women and children to become slaves, and, by 1860, as many as 5,000 to 6,000 Navajo slaves (over half the Navajo population) were estimated to be living with families in New Mexican villages. When the United States acquired much of the Southwest from Mexico in 1848, government officials promised settlers protection from Navajo and Apache raiders, and, in 1862, Kit Carson was appointed to lead troops against the Mescalero Apache and then the Navajo. Using a scorched-earth policy, Carson destroyed hogans (circular Navajo homes made of earth and logs), fields, crops, animals, and people. A brutal winter and the destruction of their resources brought defeat to the Navajo, who were forced to go on the Long Walk, a 250-mile death march to Fort Sumner, also known as Bosque Redondo, in New Mexico. Confined to what was basically a concentration camp, even more Navajos died when they had to endure drought, starvation, overcrowded conditions, land too poor for farming, epidemics, and raids by other tribes. Finally, the federal government decided to make a treaty with the Navajo that would allow them to return to a portion of their homeland. Today, the Long Walk continues to be a powerful component of Navajo identity.

Unfortunately, the U.S. government continued to treat Native Americans as wards of the government during the crucial 60 to 70 years after the establishment of each tribe's reservation, missing the crucial formative period. Instead of viewing the situation as transitional, the government created a situation of permanent dependency. While their traditional political institutions were weakened and lost as a result of increased dependency, the Navajo were also losing an opportunity to gain experience in self-government that could have integrated their government into the national system. The system that administered the Navajo was responsible to the federal bureaucracy and not to the Navajo themselves.

When the railroad reached western New Mexico in 1881, trading posts sprang up along its route. Traders extended credit when Indians left items as security as well as exchanging goods through bartering, and traders were quick to recognize the beauty of Navajo jewelry and blankets to non-Indians. Soon traders began to encourage women to weave rugs and men to create jewelry as the railroad brought an increasing number of tourists eager for a glimpse of this once isolated region.

The Navajo established its tribal council in 1923, primarily as a response to pressure from mineral companies that were interested in drilling on Navajo land. Modeled after Anglo-American institutions, rather than on Navajo institutions, the tribal council was the Navajos' first centralized political organization. The size of the reservation made the council ill equipped to deal with issues specific to local areas, so in 1927, the reservation was divided into local units, known as chapters, to deal with more localized problems. The people in each chapter elected officers who represented them in the Navajo Tribal Council.