In 1625, a group of Dutch colonists began building a fort and laying out a town on Manhattan Island. They named their settlement New Amsterdam. In 1626, Peter Minuit, the Dutch governor (or director-general), bought Manhattan from the Indians for goods worth 60 Dutch guilders, or about $24. During the next few years, Wiltwyck (now Kingston), Rensselaerswyck (now Rensselaer), Breuckelen (now Brooklyn), Schenectady, and other settlements were established in New Netherland by Dutch colonists.

In 1629, the Dutch West India Company set up the patroon (landowner) system to speed the settlement of New Netherland. Members of the company were given huge tracts of land, which they could keep if they colonized the land with settlers. Only one patroonship lasted into the 1700's, that of Kiliaen Van Rensselaer, an Amsterdam diamond merchant. His land covered much of present-day Albany, Columbia, and Rensselaer counties. Van Rensselaer began the practice of leasing his land to tenant farmers. The tenant system in New York lasted until the mid-1800's. A series of tenant revolts forced it to end.