Tensions with the public and threatened punitive action by Indian authorities originally motivated the founders and leaders of the Rajneeshee movement, Bhagwan Shri Rajneesh and Ma Anand Sheela, to leave India and begin a new religious settlement in the United States.

[6][7][8][failed verification] Discussions of this new settlement began as early as 1980, but Rajneesh did not agree to relocate until May 1981, when he travelled to the United States on a tourist visa, ostensibly for medical purposes.

[9][failed verification] Rajneeshpuram was planned from the beginning as a home for Rajneesh's followers in the United States, most of whom were directed to sell all of their belongings before moving there.

[14] Within three years, the neo-sannyasins (Rajneesh's followers, also termed Rajneeshees in contemporaneous press reports) developed a community,[15] turning the ranch from an empty rural property into a city of up to 7,000 people, complete with typical urban infrastructure such as a fire department, police, restaurants, malls, townhouses, a 4,200-foot (1,300 m) airstrip, a public transport system using buses, a sewage reclamation plant, a reservoir,[14] and a post office with the ZIP code 97741.

[14] Oregon Attorney General David B. Frohnmayer maintained that the city was essentially an arm of a religious organization, and that its incorporation thus violated the principle of separation of church and state.

[14] As Rajneeshpuram grew in size, heightened tensions led certain fundamentalist Christian church leaders to denounce Rajneesh, the commune, and his followers.

[14] She did little to defuse the conflict, employing a crude, caustic and defensive speaking style that exacerbated hostilities and attracted media attention.

[14][23] The subsequent criminal investigation, the largest in Oregon history, confirmed that a secretive group had, unbeknownst to both government officials and nearly all Rajneeshpuram residents, engaged in a variety of criminal activities, including the attempted murder of Rajneesh's physician, wiretapping and bugging within the commune and within Rajneesh's home, poisonings of two public officials, and arson.

[14][24] In 1984, Ma Anand Sheela and several Rajneeshpuram citizens planned, organized, and executed a bioterrorism attack, poisoning the salad bars of ten restaurants in Wasco County.

To ferry the actual cargo and passengers the Rajneeshees created an airline called Air Rajneesh which operated large commuter aircraft out of Big Muddy Ranch Airport.

Sheela was extradited from West Germany, tried, convicted, and sentenced to prison for attempted murder, assault, wiretapping, arson, immigration fraud,[26][27][28][4] and her role in the bioterror attack.

As part of his plea bargain, Rajneesh agreed to leave the United States, returned to Pune, India, and the commune disbanded after his followers left Oregon.

[33][34] In 1985, the ranch was listed for sale at over $28M, but was ultimately sold in 1988 at a sheriff's auction for $4.5M to Connecticut General Life Insurance Company, the sole bidder.