The region now known as Mato Grosso was initially part of the Spanish Empire. Jesuits moving north and west from Paraguay in the early part of the eighteenth century created the first settlements. They were followed by explorers and miners. The first recorded European contact with the Bakairi was in 1723, when they were described as being enslaved to work in the local gold mines. Population figures for the Indians during this period are difficult to estimate, although they were probably more numerous than they are now. The Bakairi divided into two separate groups in the early nineteenth century. The western Bakairi were absorbed into the cattle-raising economy that replaced the gold and slave trade of the eighteenth century. Later they exploited rubber in their territory and sold it in nearby towns. In the late 1980s the western Bakairi numbered 120 and lived on a tiny reservation of 9,000 hectares, which they shared with a rubber-collecting firm. The eastern Bakairi fled from contact with the Spanish, and later the Portuguese, into the headwaters of the Rio Xingu. They inhabited that region with at least nine other tribes, who frequently visited and traded with each other.
Eventually the headwaters became known as a distinct culture area. It was first visited in the late nineteenth century by German explorers, who recorded visiting seven Bakairi villages. It is estimated that about 325 Bakairi lived in the area at that time. The eastern or Xinguano Bakairi left the Xingu culture area between 1900 and 1920 when a series of devastating epidemics ravaged the indigenous population. They settled on the Rio Paranatinga. In 1918 a 50,000-hectare reservation was decreed for them. The Bakairi passed from relative isolation to frequent contact after 1920.
The Indian Protection Service, which later became the National Brazilian Indian Protection Service, rigorously pursued an assimilation policy, forcing the Indians to wear clothes and to work on Protection Service lands. In the 1970s the assimilation policy was slightly relaxed, but in 1980 the Bakairi received mechanized equipment and chemical fertilizers for farming the cerrado part of the reservation. The foundation's goal was to encourage mastery of industrial-agricultural skills that would increase participation in the national economy. Results of this experiment are mixed.