Magadan Oblast was established on December 3, 1953 in what had popularly been known as Kolyma. As a result of considerable raw resources, especially gold, silver, tin, and tungsten deposits, mining activities and road building had been developed during the Stalin era in the 1930s and 1940s under the coordination of Dalstroy and its forced labor camps. Upon Stalin's death, Dalstroy was disbanded and the regional administration took over many of its former responsibilities.

From then on, paid labor replaced most of the convict-based manpower, attracted by the region's rapid economic expansion, especially the gold-mining interests.

The indigenous peoples of the region, including the Evens, Koryaks, Yupiks, Chukchis, Orochs, Chuvans and Itelmens, who had traditionally lived from fishing along the Sea of Okhotsk coast or from reindeer herding in the River Kolyma valley, suffered from the industrialization of the area but were able to rely on institutional support until 1987 when Perestroika started to cause many of the older structures to close. As a result, many of those who can no longer rely on traditional sources of income are now unemployed.

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