The Great Sioux Reservation was established in the Fort Laramie Treaty of 1868, and includes all of modern western South Dakota (commonly known as "West River" South Dakota) and modern Boyd County, Nebraska. This area was established as a reservation for the Teton Sioux, also known as the Lakota: the seven western bands of the "Seven Council Fires" (the Great Sioux Nation). In addition to the reservation dedicated to the Lakota, they also reserved the right to hunt and travel in "unceded" territory in much of Wyoming and the Sandhills and Panhandle of modern Nebraska. Because each band had its own preferred area, a series of agencies were established for the Bureau of Indian Affairs to regulate the Lakota in this vast area. The United States used the Missouri River to form the eastern boundary of the Reservation, but this included some land it had already allocated to other tribes, such as the Ponca. The Lakota Nation considered this land central to their territory, as it had been since their discovery of the Black Hills (Lakota name: Paha Sapa) in 1765, and their taking over the territory after conquest of the Cheyenne Indians in 1776.
Custer's 1874 Black Hills Expedition from Fort Abraham Lincoln (near Bismarck, Dakota Territory) to the Black Hills or Paha Sapa discovered gold. The public announcement brought miners and conflict with the Lakota. The US Army defeated the Lakota in the Black Hills War. By a new treaty of 1877, the US took a strip of land along the western border of Dakota Territory 50 miles (80 km) wide, plus all land west of the Cheyenne and Belle Fourche Rivers, including all of the Black Hills in modern South Dakota. However, the bulk of the Great Sioux Reservation remained intact for another 13 years.
In 1887, Congress passed the General Allotment Act, also called the Dawes Act. On 2 March 1889, Congress passed another act (just months before North Dakota and South Dakota were admitted to the Union on 2 November 1889), which partitioned the Great Sioux Reservation, creating five smaller reservations out of portions of it:
(Neither the Crow Creek Reservation east of the Missouri River in central South Dakota nor the Fort Berthold Reservation, which straddles the Missouri River in western North Dakota, were part of the original Great Sioux Reservation, although many historians assume one or both were.) With the boundaries of these five reservations established, approximately 9 million acres (36,000 km²), one-half of the former Great Sioux Reservation, was opened for public purchase for ranching and homesteading. Much of the area was not, in fact, homesteaded until the 1910s. The Lakota tribes "received" $1.25 per acre, usually used to offset agency expenses in meeting federal treaty obligations to the tribes.
Following the procedures of the Dawes Allotment Act, the remaining reservations were in turn greatly reduced in size, through the allocation of 320-acre (1.3 km²) parcels to heads of families. The allotment of individual parcels and other measures greatly reduced the land in Indian ownership, while attempting to force the people to convert to the lifestyles of farmers and craftsmen. The government then sold "surplus" land for homesteading. Some individual Lakota owners sold their allocations of land as well.
By the 1960s, the five reservations were melting away, both through the allocation process and through the US seizure of land for water-control projects, such as construction of Lake Oahe and other mainstem reservoirs on the Missouri River as part of the Pick-Sloan Missouri Basin Program. Rosebud Reservation, which once included all of four counties and part of another, had its boundaries reduced to a single county: Todd County in south-central South Dakota, even though much Indian-owned land remained in the other counties. Similar reductions occurred in the other reservations. In some cases, although non-Native homesteads were abandoned during the Dust Bowl era of the 1930s, the federal government moved the land to other departments, such as part of the modern National Grasslands and Badlands National Park, and land controlled by the Bureau of Land Management. It did not revert the abandoned land to the Lakota nations and people. In some cases, the US appropriated more land from inside the reduced reservations, as in the case of the WW2-era Badlands Bombing Range, taken from the Oglala Sioux of Pine Ridge. Although the range was declared surplus to USAF needs in the 1960s, it was transferred to the National Park Service rather than returned to the tribe's ownership.
Both inside and outside the current reservation boundaries in West River today, the Lakota are an integral part of the region and its history: many towns have Lakota names, such as Owanka, Wasta, and Oacoma. Towns such as Hot Springs, Timber Lake, and Spearfish are named in English after the original Lakota names. Some rivers and mountains retain their Lakota names. The traditional Lakota game of Buffalo and antelope graze together with cattle and sheep. Numerous monuments stand in honor of Lakota and European-American heroes and events.