Traders and Catholic missionaries from the Germanic parts of the Holy Roman Empire began to arrive in the latter half of the 12th century. Pope Clement III named Father Meinhard of Holstein, who had built a church at Uexküll (today Ikšķile – the German name Uexküll derives from the Finnic for “one village”), the first bishop of Uexküll in 1188. He met with little success in Christianizing the Livs and died a decade later. Pope Innocent III declared a crusade against the pagan Balts and Meinhard’s successor, Berthold, was accompanied by a small armed force. Bishop Berthold was killed in battle within a year, however. Albert of Buxhoeveden, the nephew of the powerful Archbishop of Bremen, convinced the Pope to declare a second crusade and arrived at the mouth of the Daugava with 23 ships and 500 Saxon soldiers in 1200. Deciding that Uexküll was not easily defensible, Albert founded Riga on the site of a Liv settlement, closer to the mouth of the river, in 1201.

A year later, Bishop Albert founded the Brothers of the Sword as an order of “warrior monks.” Livonia – the name was soon applied to all of what is now Estonia and Latvia – was pronounced Terra Mariana, Mary’s Land (Latgallia is still known as Mōras zeme, the pagan Mōra and the Virgin Mary having melded).

Service in the Baltic crusades was equivalent to service in the Middle Eastern crusades in the eyes of the Church. Albert began to grant fiefs to his soldiers, making them his vassals and thuse superimposing the Western European feudal system on the eastern Baltic littoral.

Over the next centuries, increasing social and political barriers between the Germans and the indigenous inhabitants reduced the latter to a servant and peasant class, and by the beginning of the 16th century most of the peasants were serfs, bound to the land as chattel. In the towns, property ownership and most trades were generally prohibited to non-Germans (German: Undeutsche).

Despite the worsening geopolitical situation in the 16th century, political power in the Livonian Confederation was never centralized, as it came to be in neighboring countries, but remained divided between the archbishoprics, the Livonian Order, and the Hanseatic towns.

It would be impossible to overemphasize the importance of Riga in the region and beyond, from its role as a separate seat of power soon after the founding – an autonomy it tried to retain as late as the late 19th century – to its domination of regional trade. William Cobbett would make the significance of the city as a primary link between East and West clear in 1801: "What political relations can we have with countries situated beyond the Niemen and the Boristhenes? We maintain communication with these countries by Riga, much in the same manner that we maintain a communication with China by Canton." During Swedish rule, Riga would be the largest city in Sweden; under Russian rule, it would be the third largest city in the Empire for a time.

Ivan the Terrible, eager to gain access to the Baltic Sea, invaded Livonia in 1558.  The Order turned to Sigismund II Augustus, the King of Lithuania-Poland, for aid, and the Confederation was dissolved. Sigismund declared the territory north of the Daugava (today Latgale, Vidzeme, and southern Estonia) the Ducatus Ultradunensis – the “Duchy across the Daugava” (looking from the south). Most of the left bank became the Duchy of Courland and Semigallia, a fief of Lithuania that retained control over its internal affairs.

In the Ducatus Ultradunensis, Stefan Batory introduced the Counter-Reformation, which was strongly resisted in Riga; Jesuits made major contributions to Latvian education, and the first printing press was established. The German nobility retained its privileges.

The 17th and early 18th century saw a struggle between Poland, Sweden and Russia for supremacy in the eastern Baltic. Gustavus Adolphus of Sweden took Riga in 1621, and the larger part of Polish Livonia, including Vidzeme, came under Swedish rule with the Truce of Altmark in 1629. The term "Swedish era" (Latvian: zviedru laiki) is still synonymous with benefic rule; though serfdom was not abolished, it was strictly regulated and a network of schools was established for the peasantry. The Treaty of Nystad ending the Great Northern War in 1721 gave Vidzeme to Russia (it became part of the guberniya of Livland). Latgallia remained part of Poland as Inflanty until 1772, when it, too, was joined to Russia.

In the Duchy of Courland, a German minority of about 4% ruled the indigenous majority. Courland became known as a "paradise of the nobles," though the code granting privileges to the German nobility declared the country a "social paradise." Under the reign of Jakob von Kettler, 1642-1682, Courland prospered and even acquired colonies – Tobago in the Caribbean and the Gambia in Africa. Courland became a Russian province (the guberniya of Courland) in 1795, bringing all of what is now Latvia into Imperial Russia.

The promises Peter the Great made to the Baltic German nobility at the fall of Riga in 1710, confirmed by the Treaty of Nystad and known as "the Capitulations," largely reversed the Swedish reforms. The emancipation of the serfs
took place in Courland in 1817 and in Livland in 1819. In practice, the emancipation was actually advantageous to the nobility because it dispossessed the peasants of their land without compensation.

At the beginning of the 19th century, 7% of the population was urban, this portion rising to 40% by its close. The population grew from c. 720,000 persons to almost two million by the end of the century, the proportion of indigenous inhabitants falling from c. 90% to 68%. The social structure changed dramatically, with a class of independent farmers establishing itself after reforms allowed the peasants to repurchase their land, landless peasants numbering 591,000 in 1897, a growing urban proletariat and an increasingly influential Latvian bourgeoisie.