Indian hunters and fishermen inhabited the region now known as Michigan as early as 9000 BC; these peoples were making use of copper found in the upper peninsula—the first known use of a metal by peoples anywhere in the western hemisphere. Around 1000 BC, their descendants introduced agriculture into southwestern Michigan. In the latter part of the prehistoric era, the Indians appear to have declined in population.

In the early 17th century, when European penetration began, Michigan's lower peninsula was inhabited by tribes of Native Americans who may have moved west of Lake Michigan for temporary periods during periods of war. In the upper peninsula there were small bands of Ojibwa along the St. Marys River and the Lake Michigan shore; in the west, Menomini Indians lived along the present Michigan-Wisconsin border. Both tribes were of Algonkian linguistic stock, as were most Indians who later settled in the area, except for the Winnebago of the Siouan group in the Green Bay region of Lake Michigan, and the Huron of Iroquoian stock in the Georgian Bay area of Canada. In the 1640s, the Huron were nearly wiped out by other Iroquois tribes from New York, and the survivors fled westward with their neighbors to the north, the Ottawa Indians. Eventually, both tribes settled at the Straits of Mackinac before moving to the Detroit area early in the 18th century. During the same period, the Potawatomi and Miami Indians moved from Wisconsin into southern Michigan.

For two centuries after the first Europeans came to Michigan, the Indians remained a vital force in the area's development. They were the source of the furs that the whites traded for, and they also were highly respected as potential allies when war threatened between the rival colonial powers in North America. However, after the War of 1812, when the fur trade declined and the possibility of war receded, the value of the Indians to the white settlers diminished. Between 1795 and 1842, Indian lands in Michigan were ceded to the federal government, and the Huron, Miami, and many Potawatomi were removed from the area. Some Potawatomi were allowed to remain on lands reserved for them, along with most of the Ojibwa and Ottawa Indians in the north.

The first European explorer known to have reached Michigan was a Frenchman, Etienne Brulé, who explored the Sault Ste. Marie area around 1620. Fourteen years later, Jean Nicolet explored the Straits of Mackinac and the southern shore of the upper peninsula en route to Green Bay. Missionary and fur trading posts, to which were later added military forts, were established at Sault Ste. Marie by Father Jacques Marquette in 1668, and then at St. Ignace in 1671. By the 1680s, several temporary posts had been established in the lower peninsula. In 1701, Antoine Laumet de la Mothe Cadillac founded a permanent settlement at the site of present-day Detroit.

Detroit and Michigan grew little at first, however, because the rulers of the French colony of New France were obsessed with the fur trade, which did not attract large numbers of settlers. After France's defeat in the French and Indian War, fears that the British would turn the area over to English farmers from the coastal colonies, with the consequent destruction of the Indian way of life, led the Indians at Detroit to rebel in May 1763, under the leadership of the Ottawa chief Pontiac. Other uprisings resulting from similar grievances soon spread throughout the west but ended in failure for the Indians. Pontiac gave up his siege of Detroit after six months, and by 1764 the British were in firm control. Nevertheless, the British authorities did not attempt to settle the area. The need to protect the fur trade placed the people of Michigan solidly on the British side during the American Revolution, since a rebel triumph would likely mean the migration of American farmers into the west, converting the wilderness to cropland. The British occupied Michigan and other western areas for 13 years after the Treaty of Paris in 1783 had assigned these territories to the new United States. The US finally got possession of Michigan in the summer of 1796.

Michigan became a center of action in the War of 1812. The capture of Detroit by the British on 16 August 1812 was a crushing defeat for the Americans. Although Detroit was recaptured by the Americans in September 1813, continued British occupation of the fort on Mackinac Island, which they had captured in 1812, enabled them to control most of Michigan. The territory was finally returned to American authority under the terms of the Treaty of Ghent at the end of 1814. With the opening in 1825 of the Erie Canal, which provided a cheap, all-water link between Michigan and New York City, American pioneers turned their attention to these northern areas, and during the 1820s settlers for the first time pushed into the interior of southern Michigan.

Originally part of the Northwest Territory, Michigan had been set aside in 1805 as a separate territory, but with boundaries considerably different from those of the subsequent state. On the south, the territory's boundary was a line set due east from the southernmost point of Lake Michigan; on the north, only the eastern tip of the upper peninsula was included. In 1818 and 1834, areas as far west as Iowa and the Dakotas were added to the territory for administrative purposes. By 1833, Michigan had attained a population of 60,000, qualifying it for statehood. The territorial government's request in 1834 that Michigan be admitted to the Union was rejected by Congress, however, because of a dispute over Michigan's southern boundary. When Indiana became a state in 1816, it had been given a 10-mi (16-km) strip of land in southwestern Michigan, and Michigan now refused to accede to Ohio's claim that it should be awarded lands in southeastern Michigan, including the present site of Toledo. In 1835, Michigan militia defeated the efforts of Ohio authorities to take over the disputed area during the so-called Toledo War, in which no one was killed. Nevertheless, Ohio's superior political power in Congress ultimately forced Michigan to agree to relinquish the Toledo Strip. In return, Congress approved the state government that the people of Michigan had set up in 1835. As part of the compromise that finally brought Michigan into the Union on 26 January 1837, the new state was given land in the upper peninsula west of St. Ignace as compensation for the loss of Toledo.

Youthful Stevens T. Mason, who had led the drive for statehood, became Michigan's first elected governor, but he and the Democratic Party fell out of grace when the new state was plunged into financial difficulties during the depression of the late 1830s. The party soon returned to power and controlled the state until the mid-1850s. In Michigan, as elsewhere, it was the slavery issue that ended Democratic dominance. In July 1854, antislavery Democrats joined with members of the Whig and Free-Soil parties at a convention in Jackson to organize the Republican Party. In the elections of 1854, the Republicans swept into office in Michigan, controlling the state, with rare exceptions, until the 1930s.

Abraham Lincoln was not the first choice of Michigan Republicans for president in 1860, but when he was nominated, they gave him a solid margin of victory that fall and again in 1864. Approximately 90,000 Michigan men served in the Union army, taking part in all major actions of the Civil War. Michigan's Zachariah Chandler was one of the leaders of the Radical Republicans in the US Senate who fought for a harsh policy toward the South during Reconstruction.

Michigan grew rapidly in economic importance. Agriculture sparked the initial growth of the new state and was responsible for its rapid increase in population. By 1850, the southern half of the lower peninsula was filling up, with probably 85% of the state's population dependent in some way on agriculture for a living. Less than two decades later, exploitation of vast pine forests in northern Michigan had made the state the top lumber producer in the US. Settlers were also attracted to the same area by the discovery of rich mineral deposits, which made Michigan for a time the nation's leading source of iron ore, copper, and salt.

Toward the end of the 19th century, as timber resources were being exhausted and as farming and mining reached their peak stages of development, new opportunities in manufacturing opened up. Such well-known Michigan companies as Kellogg, Dow Chemical, and Upjohn had their origins during this period. The furniture industry in Grand Rapids, the paper industry in Kalamazoo, and numerous other industries were in themselves sufficient to ensure the state's increasing industrial importance. But the sudden popularity of Ransom E. Olds's Oldsmobile runabout, manufactured first in Lansing, inspired a host of Michiganians to produce similar practical, relatively inexpensive automobiles. By 1904, the most successful of the new models, Detroit's Cadillac and the first Fords, together with the Oldsmobile, had made Michigan the leading automobile producer in the country—and, later, in the world. The key developments in Michigan's auto industry were the creation of General Motors by William C. Durant in 1908; Henry Ford's development of the Model T in 1908, followed by his institution of the moving assembly line in 1913–14; and Walter P. Chrysler's 1925 formation of the automobile corporation named after him.

Industrialization brought with it urbanization; the census of 1920 for the first time showed a majority of Michiganians living in towns and cities. Nearly all industrial development was concentrated in the southern third of the state, particularly the southeastern area, around Detroit. The northern two-thirds of the state, where nothing took up the slack left by the decline in lumber and mining output, steadily lost population and became increasingly troubled economically. Meanwhile, the Republican Party, under such progressive governors as Fred Warner and Chase Osborn—and, in the 1920s, under a brilliant administrator, Alexander Groesbeck—showed itself far better able than the Democratic opposition to adjust to the complexities of a booming industrial economy.

The onset of the depression of the 1930s had devastating effects in Michigan. The market for automobiles collapsed; by 1932, half of Michigan's industrial workers were unemployed. The ineffectiveness of the Republican state and federal governments during the crisis led to a landslide victory for the Democrats. In traditionally Republican areas of rural Michigan, the defection to the Democratic Party in 1932 was only temporary, but in the urban industrial areas, the faith of the factory workers in the Republican Party was, for the great majority, permanently shaken. These workers, driven by the desire for greater job security, joined the recruiting campaign launched by the new Congress of Industrial Organizations (CIO). By 1941, with the capitulation of Ford Motor, the United Automobile Workers (UAW) had organized the entire auto industry, and Michigan had been converted to a strongly prounion state.

Eventually, the liberal leadership of the UAW and of other CIO unions in the state allied itself with the Democratic Party to provide the funds and organization the party needed to mobilize worker support. The coalition elected G. Mennen Williams governor in 1948 and reelected him for five successive two-year terms. By the mid-1950s, the Democrats controlled virtually all statewide elective offices. Because legislative apportionment still reflected an earlier distribution of population, however, the Republicans maintained their control of the legislature and frustrated the efforts of the Williams administration to institute social reforms. In the 1960s, as a result of US Supreme Court rulings, the legislature was reapportioned on a strictly equal-population basis. This shifted a majority of legislative seats into urban areas, enabling the Democrats generally to control the legislature at that time.

In the meantime, Republican moderates, led by George Romney, gained control of their party's organization. Romney was elected governor in 1962 and served until 1969, when he was succeeded by William G. Milliken, who held the governorship for 14 years. When Milliken chose not to run in the 1982 election, the statehouse was captured by the Democrats, ending 20 years of Republican rule. The new governor, James J. Blanchard, faced the immediate tasks of saving Michigan from bankruptcy and reducing the unemployment rate, which had averaged more than 15% in 1982 (60% above the US average).

The nationwide recession of the early 1980s hit Michigan harder than most other states because of its effect on the auto industry, which had already suffered heavy losses primarily as a result of its own inability to foresee the demise of the big luxury cars and because of the increasing share of the American auto market captured by foreign, mostly Japanese, manufacturers. In 1979, Chrysler had been forced to obtain $1.2 billion in federally guaranteed loans to stave off bankruptcy, and during the late 1970s and the first two years of the 1980s, US automakers were forced to lay off hundreds of thousands of workers, tens of thousands of whom left the state. Many smaller businesses, dependent on the auto industry, closed their doors, adding to the unemployment problem and to the state's fiscal problem; as the tax base shrank, state revenues plummeted, creating a budget deficit of nearly $1 billion. Two months after he took office in January 1983, Governor Blanchard was forced to institute budget cuts totaling $225 million and lay off thousands of government workers; at his urging, the state legislature increased Michigan's income tax by 38%.

As the recession eased in 1983, Michigan's economy showed some signs of improvement. The automakers became profitable, and Chrysler was even able to repay its $1.2 billion in loans seven years before it was due, rehire 100,000 workers, and make plans to build a $500-million technological center in the northern Detroit suburb of Auburn Hills. By May 1984, Michigan's unemployment rate had begun to drop, but the state faced the difficult task of restructuring its economy to lessen its dependence on the auto industry.

By the late 1980s, there were signs that Michigan had succeeded in diversifying its economy. Fewer than one in four wage earners worked in factories in 1988, a drop from 30% in 1978. Despite continued layoffs and plant closings by auto manufacturers between 1982 and 1988, Michigan added half a million more jobs than it lost. Many of the new jobs were in small engineering and applied technology companies, which found opportunities in the big manufacturers' efforts to automate. The state established a $100-million job retraining program to upgrade the skills of displaced factory workers, and contributed $5 million to a joint job training program created by General Motors and the United Automobile Workers. In the mid-1990s, the manufacture of transportation equipment was still Michigan's most important industry, with 28% of domestic automobiles produced in the state. Employment, wages, exports, and housing starts were all on the rise.

In the late 1990s prosperity across the nation had boosted Americans' appetite for new automobiles, including gas-guzzling sports utility vehicles. Combined with sales of other light trucks, SUVs bolstered the Big Three, now leaner and more competitive than in the pre-recession era. In 1998 Chrysler Corporation merged with German-based Daimler-Benz to form DaimlerChrysler, with headquarters in Michigan and Germany. Construction in the state was boosted by numerous road improvement projects during the late 1990s, a new Northwest Airlines terminal at Detroit Metropolitan Airport, voterapproved casinos in Detroit, and demand for new housing. In 1999, the robust economy had resulted in a low unemployment rate of 3.8%. In 2000 the state led the nation in home ownership, exceeding the national average by as much as 10%.

Republican Governor John Engler, first elected in 1990 and winning his third term in 1998, aggressively courted business during his administration. He was criticized by some for doing so at the expense of the state's environment. Engler had also, early on, garnered intense opposition to his plan to cut the state's welfare role. Nevertheless, he continued to be reelected. Among the state's challenges in 2000 were education reform (and the question of school vouchers), preserving farmlands in the face of development and urban sprawl, and, in conjunction with neighboring states and Canada, further clean-up and conservation of the Great Lakes system.

In 2002, Jennifer Granholm was elected Michigan's first female governor and the first Democrat to win the office since John Engler took office. In her 2003 State of the State Address, Granholm pledged to balance the state's budget (the state had a $1.8 billion deficit for fiscal year 2003/04), planned to create a corridor to attract technology companies to Michigan (particularly in the biotech and pharmaceutical sectors), to support education, and to purchase prescription drugs in bulk.

Michigan was one of the states affected by the 14 August 2003 massive power blackout in Canada, the Northeast and midwestern states. The largest electrical outage in US history affected 9,300 square miles and a population of over 50 million.