On 3 February 1807, British troops under the command of General Samuel Auchmuty and Admiral Charles Stirling occupied the city during the Battle of Montevideo (1807), but it was recaptured by the Spanish in the same year on 2 September when John Whitelocke was forced to surrender to troops formed by forces of the Banda Oriental—roughly the same area as modern Uruguay—and of Buenos Aires. After this conflict, the governor of Montevideo Francisco Javier de Elío opposed the new viceroy Santiago de Liniers, and created a government Junta when the Peninsular War started in Spain, in defiance of Liniers. Elío disestablished the Junta when Liniers was replaced by Baltasar Hidalgo de Cisneros.
During the May Revolution of 1810 and the subsequent uprising of the provinces of Rio de la Plata, the Spanish colonial government moved to Montevideo. During that year and the next, Uruguayan revolutionary José Gervasio Artigas united with others from Buenos Aires against Spain. In 1811, the forces deployed by the Junta Grande of Buenos Aires and the gaucho forces led by Artigas started a siege of Montevideo, which had refused to obey the directives of the new authorities of the May Revolution. The siege was lifted at the end of that year, when the military situation started deteriorating in the Upper Peru region.
The Spanish governor was expelled in 1814. In 1816, Portugal invaded the recently liberated territory and in 1821, it was annexed to the Banda Oriental of Brazil. Juan Antonio Lavalleja and his band called the Treinta y Tres Orientales ("Thirty-Three Orientals") re-established the independence of the region in 1825. Uruguay was consolidated as an independent state in 1828, with Montevideo as the nation's capital. In 1829, the demolition of the city's fortifications began and plans were made for an extension beyond the Ciudad Vieja, referred to as the "Ciudad Nueva" ("new city"). Urban expansion, however, moved very slowly because of the events that followed.
Uruguay's 1830s were dominated by the confrontation between Manuel Oribe and Fructuoso Rivera, the two revolutionary leaders who had fought against the Empire of Brazil under the command of Lavalleja, each of whom had become the cacique of their respective faction. Politics were divided between Oribe's Blancos ("whites"), represented by the National Party, and Rivera's Colorados ("reds"), represented by the Colorado Party, with each party's name taken from the colour of its emblems. In 1838, Oribe was forced to resign the presidency; he established a rebel army and began a long civil war, the Guerra Grande, which lasted until 1851.
The city of Montevideo suffered a siege of eight years between 1843 and 1851, during which it was supplied by sea with English and French support. Oribe, with the support of the then conservative Governor of Buenos Aires Province Juan Manuel de Rosas, besieged the Colorados in Montevideo, where the latter were supported by the French Legion, the Italian Legion, the Basque Legion and battalions from Brazil. Finally, in 1851, with the additional support of Argentine rebels who opposed Rosas, the Colorados defeated Oribe. The fighting, however, resumed in 1855, when the Blancos came to power, which they maintained until 1865. Thereafter, the Colorado Party regained power, which they retained until past the middle of the 20th century.
After the end of hostilities, a period of growth and expansion started for the city. In 1853 a stagecoach bus line was established joining Montevideo with the newly formed settlement of Unión and the first natural gas street lights were inaugurated. From 1854 to 1861 the first public sanitation facilities were constructed. In 1856 the Teatro Solís was inaugurated, 15 years after the beginning of its construction. At the end of 1861 the areas of Aguada and Cordón were incorporated to the growing New City (Ciudad Nueva). In 1866, an underwater telegraph line connected the city with Buenos Aires. The statue of Peace, La Paz, was erected on a column in Plaza Cagancha and the building of the Postal Service as well as the bridge of Paso Molino were inaugurated in 1867.
In 1868, the horse-drawn tram company Compañía de Tranvías al Paso del Molino y Cerro created the first lines connecting Montevideo with Unión, the beach resort of Capurro and the industrialized and economically independent Villa del Cerro, at the time called Cosmopolis. In the same year, the Mercado del Puerto was inaugurated. In 1869, the first railway line of the company Ferrocarril Central del Uruguay was inaugurated connecting Bella Vista with the town of Las Piedras. During the same year and the next, the neighbourhoods Colón, Nuevo París and La Comercial were founded. The famous to our days Sunday market of Tristán Narvaja Street was established in Cordón in 1870. Public water supply was etsablished in 1871. In 1878, Bulevar Circunvalación was constructed, a boulevard starting from Punta Carretas, going up to the north end of the city and then turning east to end at the beach of Capurro. It was renamed to Artigas Boulevard (its actual name) in 1885.
The first telephone lines were installed in 1882 and electric street lights took the place of the gas operated ones in 1886. The Hipódromo de Maroñas started operating in 1888, and the neighbourhoods of Reus del Sur, Reus del Norte and Conciliación were inaugurated in 1889. The new building of the School of Arts and Trades, as well as Zabala Square in Ciudad Vieja were inaugurated in 1890, followed by the Italian Hospital in 1891. In the same year, the village of Peñarol was founded in 1891. Other neighbourhoods that were founded were Belgrano and Belvedere in 1892, Jacinto Vera in 1895 and Trouville in 1897. In 1894 the new port was constructed, and in 1897, the Central Railway Station of Montevideo was inaugurated.