There was no great rush to populate and develop the island and, from around 1685, Indian Ocean pirates began using Île Bourbon as a trading base. Until 1715, the French East India Company was content to provide only for its own needs and those of passing ships, but then coffee was introduced, and between 1715 and 1730 it became the island's main cash crop and as a result the economy changed dramatically. The French enslaved Africans to do the intensive labour required for coffee cultivation. During this period, grains, spices and cotton were also brought in as cash crops.

Like Mauritius, Réunion came of age under the governourship of the remarkable Mahé de La Bourdonnais who served from 1735 to 1746. However, La Bourdonnais treated Mauritius as the favoured of the sibling islands and Réunion was left in a Cinderella role.

As a result of poor management and the rivalry between France and Britain during the 18th century, as well as the collapse of the French East India Company, the government of the island passed directly to the French crown in 1764. After the French Revolution, it came under the jurisdiction of the Colonial Assembly. In the late 18th century, there were a number of slave revolts and those who managed to escape made their way to the interior. They organised themselves into villages run by democratically elected chiefs and fought to preserve their independence from colonial authorities.

The coffee plantations were destroyed by cyclones very early in the 19th century, and in 1810, during the Napoleonic Wars, Bonaparte lost the island to the British. Five years later, under the Treaty of Paris, the spoil was returned to the French. The British, however, retained their grip on Rodrigues, Mauritius and the Seychelles. Under British rule, sugar cane was introduced to Réunion and quickly supplanted food production as the primary crop. It resulted in the dispossession of many small farmers who were forced to sell out to those with capital to invest in the new monoculture. The supplanted farmers migrated to the interior to find land and carry on with their agricultural activities. During this period, the Desbassyns brothers rose to success as the island's foremost sugar barons. The vanilla industry, introduced in 1819, also grew rapidly.

The golden age of trade and development in Réunion lasted until 1870, when competition from Cuba and the European sugar beet industry, combined with the opening of the Suez Canal, resulted in an economic slump. Shipping decreased, the sugar industry declined and land and capital were further concentrated in the hands of a small French elite.

After WWI, the world demand for sugar increased, helping lift Reunion's economy out of the doldrums. As things turned out, the reprieve was all-too-brief: during WWII, an economic blockade once again applied the brakes to the island's economy. Part of the problem was the legal definition of a colony under French law, which obligated the colony to provide to the French mainland goods of greater value than the amount of money allocated to it. A colony had to be profitable. This obligation was lifted in 1946, when Réunion's status changed from colony to overseas department, a change in status intended to provide the island with the benefits of social and political equality with the mainland.

The island still falls under the jurisdiction of the French government. There have been independence movements from time to time but, unlike those in France's Pacific territories, they have never amounted to anything. Even the Communist Party on the island seeks autonomy rather than independence; and, until recently, Réunion seemed satisfied to remain totally French.