After the occupation of the Baku khanate by Russia all the estates and properties belonging to the Baku khan and his surroundings were confiscated. A military-administrative government was implemented in Azerbaijan: the khanates were changed into provinces and okrugs headed by the commandants appointed from among the tsarist officers. According to the regulations that came into force on January 1, 1841 the commandant form of government was liquidated and as a whole a system of administration similar to the all-Russian one was introduced in Transcaucasia. Baku became the centre of the Baku uyezd of the Caspian region. With the approval of the region ruled by vice-gerent in the Caucasus in 1846 a new administrative-territorial division of the area took place according to which the Baku uyezd was included in the newly established Shamakhy province.

In 1859 after a devastating earthquake in Shamakhy, the centre of the province was transferred to Baku, and the province was renamed as Baku. Government offices began to be formed in the city. As a result Baku entered a qualitatively new level of development taking the first place for its social and economic indices among other cities of Azerbaijan in the second half of the XIX century.

Oil extraction played an important role in the development of the city. Baku was involved in the fast industrial development of Russia the economy of which sharply reinforced its requirement for oil. For the first time the tsarist government which controlled the oil wells farmed them out to individuals for a certain period. But in the 60s of the XIX century it turned out that the farming system of exploiting the oil reserves was a worthless remnant of the past, and a different arrangement of the oil issue was needed for the development of this branch of industry. In 1872 new rules were ratified according to which the formal farmed out oil reserves were transferred to individuals by auction. The abolition of the farming system brought a decisive change to the entire oil issue. The started oil fever could be compared only with the gold fever in Klondike. An intensive exploitation of the Baku oil fields started and it provided a big flow of capitals of foreign oil companies. Within a short period of time departments and representations of Swiss, English, French, Belgian, German, American firms were established in Baku and the most famous among them were the firms of the Nobels and the Rotschields.

Since 1873 “an oil belt of Baku” began to be formed which was known as a Black City. A little later an industrial district of Baku including “oil villages” of Surakhany, Bibi-Heybat, Balakhany, Sabunchu was established. Here in 1848 the first oil wells in the world were drilled, the first tankers for oil transportation were constructed (1880-1885), Baku-Batumi (1897-1907) oil pipeline was laid. It was in Baku that “The Oil Issue” - the first periodical dedicated to oil and its extraction was published. This periodical was released from 1899 to 1920. By the beginning of the XX century almost half of the oil reserves in the world had been extracted in Baku.

Along with the oil industry other branches of economy also started to develop. There were constructed cement works, machinery factories and breweries, electric power stations, foundaries, textile and tobacco mills, steam-mills, banks. Commercial firms, marine steam navigation, “Caucasus and Mercury” - the largest among them opened their own representations. At that time 40% of the marine transportation of Russia was realised across the Caspian. In 1883 a railway line was opened to connect Baku and Tbilisi, in 1892 a horse-drawn tram began to run in the city and in 1900 a railway line Baku – Petrovsk (now Makhachkala) was laid which had exits to central regions of Russia and further to Europe. In 1868-1879 the first telegraph cables were laid to connect Baku, Tbilisi and Krasnovodsk, and in 1886 the first telephone station was constructed. By 1917 Shollar water pipeline started to provide the city with water. This pipeline has been smoothly functioning up to now.

Baku was developing not only economically, but also culturally. In 1873 the first Azerbaijani National Theatre was founded. In 1875 the first newspaper began to be published. In 1864 Nariman Narimanov founded the first national public library. In 1908 the first opera in the East “Leily and Majnun” was staged. Printing work was developing, publishing houses were being opened, newspapers including “Baku”, “Kaspiy”, “Bakinskiy rabochiy”, “Hummat”, “Yoldash”, also different brochures, books and magazines came to be published in Azerbaijani and Russian.

The city in the Apsheron Peninsula grew with an extraordinary speed that had been experienced neither in Russia, nor in Europe at all. From all parts of Russia and from abroad people of different nationalities rushed into Baku in search of work and happiness. By 1883 there were more than 45 thousand inhabitants in Baku, and in 1913 this number rose to 200 thousand. The vicinity of the city was equipped with modern amenities, there was an increase in the number of architectural monuments distinguished by their unusual elegance. Among them are a railway station known as “Tiflis”; the Baku municipal duma; Realny vocational school (now the building of the University of Economy); Ismailiyya” (the Presidium of Azerbaijan Academy of Sciences); the Public Assembly (Philharmonic Society) and so on. At the same time a lot of trees and gardens were planted, there appeared a boulevard with a nice complex of the city bath-houses, gardens: Mikhaylovski (at Baksoviet underground station), Marinski (Molokanski), Nobelski (the park after Nizami) and Kolyubakinski park.

So the economic rise at the end of the XIX century turned Baku into one of the greatest centres of Russia and the biggest and the most important city in the Caucasus. At the beginning of the XX century the development of Baku continued, though at times this development was delayed by crises. The fall of the price for oil led inevitably to the reduction of the payment, to the deterioration of the labour conditions and to the growth of the number of the unemployed. The hard economic situation resulted in a range of actions of the workers in 1901. The biggest one was the strike of the Baku workers in July 1903, which acquired a general character.

On December 12, 1904 “The Organisation of Balakhany and Bibi-Heybat Workers” called all the industrial workers to a general strike. The work was ceased in the Nobels’, Rotschields’, Mantashev’s and Mirzoyev’s firms, the workers of Bibi-Heybat, Black City and White City, the Balakhany and Sabunchu industrial districts joined the strike. On the very first day workers and employees of about 40 firms joined this grand action. On December 30 the first collective agreement in the history of the Russian workers’ movement known under the name “The Fuel Oil Constitution” was signed in the presence of a huge crowd of workers at the factory “The Electric Power”. This agreement was the Baku workers’ greatest victory, which actually improved their material conditions.

The year of 1905 became the culminating stage in the struggle of the masses with the autocracy against social and national oppression. The January actions of the Baku workers were the continuation of the December general strike. One of the forms of the autocracy’s struggle against the mass movement was the provocation of inter-ethnic clashes. The first one of them was arranged in Baku on February 6-9, 1905. To inflame the passions the tsarist authorities aggravated contradictions between the Azerbaijani and Armenian bourgeoisies. The police and the army did not intervene in the bloody struggle and it resulted in the death of hundreds of people.

A martial law was imposed in Baku and in the province of Baku in February 1905. But in the summer of the following year a new rise of the revolutionary activities started. To suppress the workers’ actions a state of siege was declared on August 22. The tsarist authorities moved the army against the strikers, and the repression started, and a police terror began raging in the city. At the same time the government tried to regulate the interrelations between the oil industrialists and workers. By the decree of October 28, 1906 the borough of Baku was established to govern Baku and the neighbouring oil industry districts. The head of the borough was appointed directly by the Emperor and was allotted the rights of a governor. In December 1906 the martial law in Baku and in the region of Baku was replaced by the state of an emergency guard, and the position of an acting general-governor was abolished. World War I that broke out in 1914 caused elements of disorganisation in the Baku oil region too. The unemployment sharply grew; the living standards of the workers grew worse. Revolutionary movement grew in the country. In February 1917 the tsarist government fell in Russia. Under new conditions the “Musavat” Party holds a dominating position in Azerbaijan. Having been established in October 1917 it upheld the self-determination of the nation since the very beginning of its foundation. At the end of October 1917 the first congress of the “Musavat” Party took place in Baku which determined the tactics and strategy of the organisation in the coming political struggle. The leader of the party was M.E.Rasulzade.

After the overthrow of the provisional government and the Bolsheviks’ advent to power in Russia, on November 2, 1917 a conference of the enlarged Baku Soviet was held in Baku. In the conference the Bolsheviks managed to declare this organ a supreme power in the city and proclaim the Soviet power. However the power of the Baku Soviet failed to spread beyond the vicinity of Baku. The remaining part of Trans-Caucasus was controlled by the Trans-Caucasian commissariat, later reorganised into the Trans-Caucasian federation.

In March 1918 the Baku Soviet arranged a massacre against the peaceful defenceless population of the Turkish quarters which resulted in the death of about 10 thousand citizens. Under the pretence of the struggle against the Musavat members the Bolshevik and Armenian gangs started the annihilation of the peaceful Azerbaijani population. The Azerbaijani quarters were fired both from the air and sea. The massacre of the city’s Moslem population was headed by S.Shaumyan, the Chairman of the Committee of Revolutionary Defence of Baku. The Chief of the headquarters of the Red Army in Baku was Z.Avetisyan, a colonel of the tsarist army and a member of the Dashnak Party. The outrages in Baku from March 30 to April 2, and further in the uyezds, were nothing but a genocide committed against the Azerbaijani people. It was because of this that the Soviet power failed to last longer and quit the stage ignominiously in the very year of 1918.

After the collapse of the Trans-Caucasian Federation on May 28, 1918 the Azerbaijan Democratic Republic was proclaimed with the “Musavat” Party at its head. That was the first republic in the entire Islamic East. Because of the complicated situation in the Republic the first Azerbaijani government convened its session not in its native land, but in Tiflis. Later it moved to Ganja. At this time Baku was under Baku Commune, and later it was controlled by the Sentrokaspi Dictatorship consisting of dashnaks and mensheviks. Turkey came to the rescue of the young Azerbaijan Republic. Along with the Turks in its Caucasian Islamic army of 15 thousand soldiers were fighting the newly formed Azerbaijani military units under the command of General Shikhlinski. Having fought in the battles all through Azerbaijan on September 15, 1918 the Caucasian Islamic Army broke the resistance of the opposing army of 50 thousand soldiers and entered Baku.

Baku became the capital of the independent Azerbaijan Democratic Republic. On September 17, 1918 the government headed by F.Khoyski arrived in Baku. New bodies of the government power started to be formed. On December 7, 1918 the Parliament of the Azerbaijan Republic started to meet.

Having been defeated in World War I, Turkey, according to the terms of Mudros armistice, had to withdraw its forces from the borders of Azerbaijan in mid November. According to the same armistice the English troops were brought in here. Headed by General W.Thomson who had declared himself the military governor of Baku, the English troops of 5 thousand soldiers arrived in Baku on November17, 1918. By General Thomson’s order a martial law was implemented in Baku until the moment when “the civil power would be strong enough to release the forces from the responsibility to maintain the public order”.

The young Republic stood the test successfully and it opened a free way to the cultural, social and economic progress. In April 1919 General Thomson’s restrictions, according to which the Ministry of Defence had been in Ganja, were lifted. The Azerbaijani troops solemnly entered Baku. At the end of August 1919 a mass evacuation of the English troops from Baku that put an end to their 9 month stay here started. Thus all the sections of the state apparatus were transferred without exception to the full jurisdiction of the Azerbaijani government.

The Azerbaijan Democratic Republic existed for about 2 years and was overthrown by Russia. On April 27, 1920 the units of the Russian Eleventh Red Army crossed the border of Azerbaijan and began to march towards Baku. At the same time the Soviet Russia presented the Azerbaijan Republic with an ultimatum to surrender. On April 28 the Eleventh Red Army entered the capital of Azerbaijan. The perfidious intervention and overturn were declared as “the Socialist revolution of the workers and peasants”. The first thing the Red Army did was to deliver oil to Russia. Only from April 30 to May 2 1920 that is literally after the establishment of the Soviet power in Baku, 12 tankers with 1.3 million poods of oil were sent to Russia. Already in the May of the same year the amount of the exported oil increased to 15 million poods and in June to 21.2 million poods of oil and oil products.

After the Soviet power had been established in Georgia and Armenia in March 1922 a contract was signed to form the Federative Union of the Trans-Caucasian Republics which was soon reorganised into the Trans-Caucasian Federative Republic. In December of the same year the Trans-Caucasian Republic, along with Ukraine, Byelorussia and the Russian Federation formed the USSR. In compliance with the new Constitution of 1936 Azerbaijan, Georgia and Armenia became independent republics within the USSR.