In 1820 the Sikh Empire, under Ranjit Singh, annexed Kashmir. In 1846, after the Sikh defeat in the First Anglo-Sikh War, and upon the purchase of the region from the British under the Treaty of Amritsar, the Raja of Jammu, Gulab Singh, became the new ruler of Kashmir. The rule of his descendants, under the paramountcy (or tutelage) of the British Crown, lasted until the Partition of India in 1947, when the former princely state of the British Indian Empire became a disputed territory, now administered by three countries: India, Pakistan, and China.

In 1819, the Kashmir Valley passed from the control of the Durrani Empire of Afghanistan to the conquering armies of the Sikhs under Ranjit Singh of the Punjab.As the Kashmiris had suffered under the Afghans, they initially welcomed the new Sikh rulers.However, the Sikh governors turned out to be hard taskmasters, and Sikh rule was generally considered oppressive.Kashmir had also now begun to attract European visitors, several of whom wrote of the abject poverty of the vast Muslim peasantry and of the exorbitant taxes under the Sikhs.High taxes forced many Kashmiri peasants to migrate to the plains of the Punjab. Kashmir became the second highest revenue earner for the Sikh Empire. During this time Kashmir shawls became known worldwide, attracting many buyers, especially in the West.

The state of Jammu, which had been on the ascendant after the decline of the Mughal Empire, came under the sway of the Sikhs in 1770. Further in 1808, it was fully conquered by Maharaja Ranjit Singh. Gulab Singh, then a youngster in the House of Jammu, enrolled in the Sikh troops and, by distinguishing himself in campaigns, gradually rose in power and influence. In 1822, he was anointed as the Raja of Jammu. Along with his able general Zorawar Singh Kahluria, he conquered and subdued Rajouri (1821), Kishtwar (1821), Suru valley and Kargil (1835), Ladakh (1834–1840), and Baltistan (1840), thereby surrounding the Kashmir Valley. He became a wealthy and influential noble in the Sikh court.

Drafted by a treaty and a bill of sale, and constituted between 1820 and 1858, the Princely State of Kashmir and Jammu combined disparate regions, religions, and ethnicities:to the east, Ladakh was ethnically and culturally Tibetan and its inhabitants practised Buddhism; to the south, Jammu had a mixed population of Hindus, Muslims and Sikhs; in the heavily populated central Kashmir valley, the population was overwhelmingly Sunni Muslim, however, there was also a small but influential Hindu minority, the Kashmiri brahmins or pandits; to the northeast, sparsely populated Baltistan had a population ethnically related to Ladakh, but which practised Shia Islam; to the north, also sparsely populated, Gilgit Agency, was an area of diverse, mostly Shiʻa groups; and, to the west, Punch was Muslim, but of different ethnicity than the Kashmir valley. After the Indian Rebellion of 1857, in which Kashmir sided with the British, and the subsequent assumption of direct rule by Great Britai

In the British census of India of 1941, Kashmir registered a Muslim majority population of 77%, a Hindu population of 20% and a sparse population of Buddhists and Sikhs comprising the remaining 3%. That same year, Prem Nath Bazaz, a Kashmiri Pandit journalist wrote: "The poverty of the Muslim masses is appalling. ... Most are landless laborers, working as serfs for absentee [Hindu] landlords ... Almost the whole brunt of official corruption is borne by the Muslim masses." Under the Hindu rule, Muslims faced hefty taxation, discrimination in the legal system and were forced into labor without any wages. Conditions in the princely state caused a significant migration of people from the Kashmir Valley to Punjab of British India.[35] For almost a century until the census, a small Hindu elite had ruled over a vast and impoverished Muslim peasantry.Driven into docility by chronic indebtedness to landlords and moneylenders, having no education besides, nor awareness of rights,the Muslim peasants had no political representation until the 1930s.