A significant section of the (now) south-western US was gained when the treaty of Guadalupe-Hidalgo was signed in February 1848 at the close of the Mexican-American War. Despite the large gain in territory, the US still lacked a southern route for a transcontinental railroad.

It was determined that the best course for a southern railroad to the west coast would require a route through the area south of the Gila river between the Rio Grande and the Colorado Rivers.

Because of the need for a southern rail route and outstanding issues with the treaty of Guadalupe-Hidalgo remaining from the war, a settlement was reached between the two nations that included the purchase of over 45 thousand square miles for 10 million dollars. This purchase and some adjustments to the treaty of Guadalupe-Hidalgo) was called the Gadsen Purchase. It was signed in 1853, and ratified by Congress in June 1854.

The entire southern border of the modern US state of Arizona and the south-western corner of modern New Mexico were gained in this acquisition.