An essential ingredient to the success of settling the West was the construction of a rail line across the continent, replacing canoe and cart routes. This idea was met with scorn by those in the east, who saw it as unnecessary and uneconomical. In 1879, a line reached Winnipeg. After much debate was waged about creating a route through the Canadian Rockies, the Canadian Pacific Railway line reached Fort Calgary and what is now Banff in 1883. Workers pushed on across the mountains, and on November 7, 1885, the final spike was laid, linking the fledgling province of British Columbia to the rest of the country. A northern route, through Edmonton and Jasper, was completed by the Grand Trunk Railway in 1914.

With two expensive rail lines in place, the government set about putting them to use by settling the land and encouraging tourists to visit the thriving resort towns of Banff and Jasper. The prairies were surveyed, and homesteads were offered at $10 per quarter section (160 acres). People from diverse ethnic backgrounds flooded the western prairies, tending to settle in communities of their own people. Life was hard for the early settlers; those in the south found the land dry, whereas those in the north had to clear land.

The first to take advantage of the extensive grasslands that had once supported millions of bison was Senator Matthew Cochrane, who in 1881 secured a grazing lease on 189,000 acres west of Calgary. This homestead was the first of many ranches to be claimed in the foothills, and many herds of cattle were driven to their new homes by American cowboys.