Following the first war of Independence in 1857, the East India Company was accused of mismanagement, and Bombay reverted to the British crown. With the outbreak of the American Civil War in 1861, and the opening of the Suez Canal in 1869, exports, specially cotton, from Bombay became a major part of the colonial economy.

The Great Indian Peninsular Railway facilitated travel within India. This network of commerce and communication led to an accumulation of wealth. This was channelled into building an Imperial Bombay by a succession of Governors. Many of Bombay's famous landmarks, the Flora Fountain and the Victoria Terminus, date from this time.

The water works, including the Hanging Gardens and the lakes were also built at this time. The Bombay Municipal Corporation was founded in 1872. However, this facade of a progressive and well-governed city was belied by the plague epidemics of the 1890s. This dichotomy between the city's symbols of power and prosperity and the living conditions of the people who make it so continues even today.

The construction of Imperial Bombay continued well into the 20th century. Landmarks from this period are the Gateway of India, the General Post Office, the Town Hall (now the Asiatic Library) and the Prince of Wales Museum. Bombay expanded northwards into the first suburbs, before spreading its nightmare tentacles into the the northern suburbs. The nearly 2000 acres reclaimed by the Port Trust depressed the property market for a while, but the Backbay reclamation scandal of the '20s was a testament to the greed for land.

The freedom movement reached a high pitch of activity against this background of developing Indian wealth. Gandhi returned from South Africa and reached Bombay on January 12, 1915. Following many campaigns in the succeeding years, the end of the British imperial rule in India was clearly presaged by the Quit India declaration by the Indian National Congress on August 8, 1942, in Gowalia Tank Maidan, near Kemp's Corner. India became a free country on August 15, 1947. In the meanwhile, Greater Bombay had come into existence through an Act of the British parliament in 1945.