The East India Company had the unusual distinction of ruling an entire country. Its origins were much humbler. On 31 December 1600, a group of merchants who had incorporated themselves into the East India Company were given monopoly privileges on all trade with the East Indies. The Company's ships first arrived in India, at the port of Surat, in 1608. Sir Thomas Roe reached the court of the Mughal Emperor, Jahangir, as the emissary of King James I in 1615, and gained for the British the right to establish a factory at Surat. Gradually the British eclipsed the Portugese and over the years they saw a massive expansion of their trading operations in India. Numerous trading posts were established along the east and west coasts of India, and considerable English communities developed around the three presidency towns of Calcutta, Bombay, and Madras. In 1717, the Company achieved its hitherto most notable success when it received a firman or royal dictat from the Mughal Emperor exempting the Company from the payment of custom duties in Bengal.

The Company saw the rise of its fortunes, and its transformation from a trading venture to a ruling enterprise, when one of its military officials, Robert Clive, defeated the forces of the Nawab of Bengal, Siraj-ud-daulah , at the Battle of Plassey in 1757. A few years later the Company acquired the right to collect revenues on behalf of the Mughal Emperor, but the initial years of its administration were calamitous for the people of Bengal. The Company's servants were largely a rapacious and self-aggrandizing lot, and the plunder of Bengal left the formerly rich province in a state of utter destitution. The famine of 1769-70, which the Company's policies did nothing to alleviate, may have taken the lives of as many as a third of the population. The Company, despite the increase in trade and the revenues coming in from other sources, found itself burdened with massive military expenditures, and its destruction seemed imminent. State intervention put the ailing Company back on its feet, and Lord North's India Bill, also known as the Regulating Act of 1773, provided for greater parliamentary control over the affairs of the Company, besides placing India under the rule of a Governor-General.

The first Governor-General of India was Warren Hastings. Under his dispensation, the expansion of British rule in India was pursued vigorously, and the British sought to master indigenous systems of knowledge. Hastings remained in India until 1784 and was succeeded by Cornwallis, who initiated the Permanent Settlement, whereby an agreement in perpetuity was reached with zamindars or landlords for the collection of revenue. For the next fifty years, the British were engaged in attempts to eliminate Indian rivals, and it is under the administration of Wellesley that British territorial expansion was achieved with ruthless efficiency. Major victories were achieved against Tipu Sultan of Mysore and the Marathas, and finally the subjugation and conquest of the Sikhs in a series of Anglo- Sikh Wars led to British occupation over the entirety of India. In some places, the British practiced indirect rule, placing a Resident at the court of the native ruler who was allowed sovereignty in domestic matters. Lord Dalhousie's notorious doctrine of lapse, whereby a native state became part of British India if there was no male heir at the death of the ruler, was one of the principal means by which native states were annexed; but often the annexation, such as that of Awadh [Oudh] in 1856, was justified on the grounds that the native prince was of evil disposition, indifferent to the welfare of his subjects. The annexation of native states, harsh revenue policies, and the plight of the Indian peasantry all contributed to the Rebellion of 1857-58, referred to previously as the Sepoy Mutiny. In 1858 the East India Company was dissolved, despite a valiant defense of its purported achievements by John Stuart Mill, and the administration of India became the responsibility of the Crown.