On July 26, 1847, the settlers issued a Declaration of Independence and promulgated a constitution. Based on the political principles denoted in the United States Constitution, it established the independent Republic of Liberia

The leadership of the new nation consisted largely of the Americo-Liberians, who initially established political and economic dominance in the coastal areas that had been purchased by the ACS; they maintained relations with United States contacts in developing these areas and the resulting trade. Their passage of the 1865 Ports of Entry Act prohibited foreign commerce with the inland tribes, ostensibly to "encourage the growth of civilized values" before such trade was allowed

By 1877, the Americo-Liberian True Whig Party was the most powerful political power in the country. It was made up primarily of people from the Americo-Liberian ethnic group, who maintained social, economic and political dominance well into the 20th century, repeating patterns of European colonists in other nations in Africa. Competition for office was usually contained within the party; a party nomination virtually ensured election.

Pressure from the United Kingdom, which controlled Sierra Leone to the west, and France with its interests in the north and east led to a loss of Liberia's claims to extensive territories. Both Sierra Leone and the Ivory Coast annexed some
territories. Liberia struggled to attract investment in order to develop infrastructure and a larger, industrial economy.

There was a decline in production of Liberian goods in the late 19th century, and the government struggled financially, resulting in indebtedness on a series of international loans.