However, much of this was ceded to the United States in 1818 (from the Treaty of 1818) and in 1838 the district was redefined as the circular region within 50 miles of Fort Garry, which was the junction of the Red and Assiniboine rivers.

This, and the arrival of Canadian surveyors, led to the Red River Rebellion, in which a Provisional Government and Legislative Assembly of Assiniboia was established by Métis leader Louis Riel to negotiate the admission of the District as a province of Canada.

The original proposal, which suggested that the new province consist of all of the fertile belt between Winnipeg and British Columbia, was rejected by the Canadian federal government as it conflicted with their plans to manage the settlement of the Northwest Territories directly.

As a compromise, a small part of the district, consisting mainly of the settled areas, was admitted to Canada as the Province of Manitoba in 1870 though the federal government retained control of crown land and natural resources until 1930.

Dewdney had reserved for himself substantial land adjacent to the Canadian Pacific Railway line on the site of what became the town, and thereby considerably enriched himself.