Although African economic history is enjoying a renaissance, the branch of the subject represented by business remains relatively neglected. The aim of this project is to reconstruct the history of African merchants in Lagos during the period that opened with abolition of the slave trade and closed with the establishment of colonial rule and the crisis brought by World War I. A new generation of educated, Christian merchants appeared in Lagos in the 1850s and prospered in the import and export trades until the close of the century, when an economic depression reduced the profitability of their businesses and the advent of colonial rule reduced their status. However, the conventional view that the embryonic middle class was eliminated is misleading. Sources relating to the merchants themselves and their commercial activities make it clear that they diversified in two ways. One group moved inland and founded the Nigerian cocoa-farming industry; another stayed in Lagos, capitalised on rising land values and became rentiers. The revised story of adaptation has implications for understanding the character of entrepreneurship under colonial rule and the part played by these innovative activities in wider issues of economic development.