The California Gold Rush, beginning in 1848, dramatically changed California with an influx of population and an economic boom. The early part of the 20th century was marked by Los Angeles becoming the center of the entertainment industry, in addition to the growth of a large tourism sector in the state. The Central Valley is home to California's important agricultural industry, the largest of any state. Other important industries have included the aerospace and oil industries. In recent decades, California has become a global leader in computers and information technology. If California were a country, its economy would rank among the ten largest in the world.

The first European to explore the coast as far north as the Russian River was Juan Rodríguez Cabrillo, in 1542, sailing for the Spanish Empire. Some 37 years later, the English explorer Francis Drake also explored and claimed an undefined portion of the California coast in 1579. Spanish traders made unintended visits with the Manila Galleons on their return trips from the Philippines beginning in 1565. Sebastián Vizcaíno explored and mapped the coast of California in 1602 for New Spain. Spanish missionaries set up some twenty California Missions along the coast of what became known as Alta California, together with small towns and presidios. The first mission in Alta California was established at San Diego in 1769. In 1821, the Mexican War of Independence gave Mexico (including California), independence from Spain; for the next twenty-five years, Alta California remained a remote northern province of the nation of Mexico. Cattle ranches, or ranchos, emerged as the dominant institutions of Mexican California. After Mexican independence from Spain, the chain of missions became the property of the Mexican government, and were secularized by 1832. The ranchos developed under ownership by Californios who had received land grants.

Beginning in the 1820s, trappers and settlers from the United States and Canada began to arrive, harbingers of the great changes that would later sweep California. These new arrivals used the Siskiyou Trail, California Trail, and Old Spanish Trail to cross the rugged mountains and harsh deserts surrounding California. In this period, Imperial Russia explored the California coast, and established a trading post at Fort Ross. In 1846, at the outset of the Mexican-American War (1846-1848), the California Republic was founded and the Bear Flag was flown, which featured a grizzly bear and a star. The Republic came to a sudden end, however, when Commodore John D. Sloat of the United States Navy sailed into San Francisco Bay and began the military occupation of California by the United States.

Following a series of battles in Southern California, including; the Battle of Dominguez Rancho, the Battle of San Pascual, the Battle of Rio San Gabriel and the Battle of La Mesa, the Treaty of Cahuenga was signed on January 13, 1847, ending hostilities in California.

Following the Treaty of Guadalupe Hidalgo that ended the war, the region was divided between Mexico and the United States; the western part of the U.S. portion, Alta California, was to become the U.S. state of California, while the lower region, Baja California, remained in the possession of Mexico.

In 1848, the non-native population of California has been estimated to be no more than 15,000. But after gold was discovered, the population burgeoned with U.S. citizens, Europeans, and other immigrants during the great California Gold Rush. In 1850, California was admitted to the United States as a free state.

At first, travel between California and the central and eastern parts of the United States was time-consuming and dangerous. A more direct connection came in 1869 with the completion of the First Transcontinental Railroad. After this rail link was established, hundreds of thousands of U.S. citizens came west, where new Californians were discovering that land in the state, if irrigated during the dry summer months, was extremely well-suited to fruit cultivation and agriculture in general. Citrus was widely grown, and the foundation was laid for the state's prodigious agricultural production. During the early 20th century, migration to California accelerated with the completion of major transcontinental highways like the Lincoln Highway and Route 66. In the period from 1900 to 1965, the population grew from fewer than one million to become the most populous state in the Union. From 1965 to the present, the population changed radically and became one of the most diverse in the world. The state is regarded a world center of engineering businesses, the entertainment and music industries, and of U.S. agricultural production.