Colonial Nigeria formed part of the British Empire from the mid-nineteenth century until 1 October 1960, when Nigeria achieved independence. Britain annexed Lagos in 1861 and established the Oil River Protectorate in 1884. British influence in the Niger area increased gradually in the course of the 19th century, but Britain did not effectively occupy the area until 1885. Other European powers acknowledged Britain's dominance over the area at the 1885 Berlin Conference.

From 1886 to 1899, much of the area was ruled by the Royal Niger Company, authorised by charter, and governed by George Taubman Goldie. In 1900, the Southern Nigeria Protectorate and Northern Nigeria Protectorate passed from company hands to the Crown. At the urging of Governor Frederick Lugard, the two territories were amalgamated as the Colony and Protectorate of Nigeria, while each of the three major regions (Northern protectorate, Southern protectorate and the Colony of Lagos) retained considerable regional autonomy. Progressive constitutions after World War II provided for increasing representation and electoral government by Nigerians. The colonial-period proper in Nigeria lasted from 1900 to 1960, after which Nigeria gained its independence.

Through a progressive sequence of regimes, the British imposed Crown Colony government on much of the area of West Africa which came to be known as Nigeria, a form of rule which was both autocratic and bureaucratic. After initially adopting an indirect rule approach, in 1906 the British merged the small Lagos Colony and the Southern Nigeria Protectorate into a new Colony of Southern Nigeria, and in 1914 that was combined with the Northern Nigeria Protectorate to form the Colony and Protectorate of Nigeria. Administration and military control of the territory was conducted primarily by white Britons, both in London and in Nigeria.

Following military conquest, the British imposed an economic system designed to profit from African labour. The essential basis of this system was a money economy—specifically the British pound sterling—which could be demanded through taxation, paid to cooperative natives, and levied as a fine.

The amalgamation of different ethnic and religious groups into one federation created internal tension which persists in Nigeria to the present day.

In the 1700s, the British Empire and other European powers had settlements and forts in West Africa but had not yet established the full-scale plantation colonies which existed in the Americas. Adam Smith wrote in 1776 that the African societies were "better established and more populous than those of the Americas, thus creating a more formidable barrier to European expansion. Though the Europeans possessed many considerable settlements both upon the coast of Africa and in the East Indies, they have not yet established in either of those regions such numerous and thriving colonies as those in the islands and continent of the America." ^{[citation needed]}

Earlier elements related to this were its founding of the Sierra Leone Colony in 1787 as a refuge for freed slaves, the independent missionary movement intended to bring Christianity to the Edo Kingdom, and programs of exploration sponsored by learned societies and scientific groups, such as the London-based African Association.

Local leaders, cognizant of the situation in the West Indies, India, and elsewhere, recognised the risks of British expansion. A chief of Bonny in 1860 explained that he refused a British treaty due to the tendency to "induce the Chiefs to sign a treaty whose meaning they did not understand, and then seize upon the country".