With the 1848 defeat of Mexico, California and other Mexican territories were ceded to U.S. rule (the Mexican Cession) under the terms of the Treaty of Guadalupe Hidalgo, which ended the war.

However, at the time, the 30-state nation was divided equally between 15 free states and 15 slave states. With the addition of vast new, agriculturally-rich territories, including California, the debate over slavery intensified dramatically. California itself was divided over the issue, as a large number of slave-owning Southerners had travelled to California to seek their fortunes in the 1849 Gold Rush, and many brought their slaves. Many miners expressed concern that slaveholders accompanied by slaves had an unfair advantage in the mining camps and that slavery's inherent inequality violated "the independent entrepreneurial sprit of the mines." However, taking slaves into California, which had no laws or enforcement mechanisms for maintaining the institution, turned out to be quite risky for the slave owners themselves. The territory had no slave patrols, nor local police interested in maintaining slavery, so slave escapes were quite common.

In October 1849, the first California Constitution Convention was held. One of the most heated debates of the Convention was on the status of slavery in the new state. While some Southerners who had come to California were staunchly in favor of giving official sanction to slavery in California, Northern abolitionists and White-American miners (who did not want competition from the slave-holders in the gold fields) were well represented within the ranks of the convention. The chairman of the convention, William Gwin, was himself a slaveholder from Tennessee. Gwin, however, was much more interested in gaining control of the California Democratic Party than he was in favoring either side of the debate. To the later chagrin of his fellow Southern members of Congress, he did not write the institution of slavery into the 1849 Constitution. The Compromise of 1850 later permitted California to be admitted to the Union as a free state. Gwin and war hero/abolitionist John C. Frémont became California's first Senators.

Although California entered the Union as a free state, the framers of the state constitution wrote into law the systematic denial of suffrage and other civil rights to non-white citizens. Some authorities went so far as to attempt to deny entry of all African-Americans, free and slave, to California. The Legislature passed a bill that would ban the immigration of free blacks to California. State Senator David C. Broderick, a fierce opponent of slavery and former firefighter from San Francisco, managed to kill the bill through parliamentary maneuver.