When a commission approached the Red Cloud Agency about the possibility of the Lakota's signing away the Black Hills, Colonel John E. Smith noted that this was "the only portion [of their reservation] worth anything to them" and concluded that "nothing short of their annihilation will get it from them."

In 1874, the government dispatched the Custer Expedition to examine the Black Hills. The Lakota were alarmed at his expedition. Before Custer's column had returned to Fort Abraham Lincoln, news of their discovery of gold was telegraphed nationally. The presence of valuable mineral resources was confirmed the following year by the Newton-Jenney Geological Expedition. Prospectors, motivated by the economic panic of 1873, began to trickle into the Black Hills in violation of the Fort Laramie Treaty. This trickle turned into a flood as thousands of miners invaded the "Hills" before the gold rush was over. Organized groups came from states as far away as New York, Pennsylvania, and Virginia.

Initially, the United States Army struggled to keep miners out of the region. In December 1874, for example, a group of miners led by John Gordon from Sioux City, Iowa, managed to evade Army patrols and reached the Black Hills, but the Army ejected them three months later. Such evictions, however, increased political pressure on Grant Administration to secure the Black Hills from the Lakota.