By the start of the American Civil War in 1861, the region consisted mostly of large cotton plantations along the river, which were worked by thousands of slave laborers.

The town of Lake Providence developed after the arrival of the Union Army in the spring of 1862. Under the direction of General Ulysses S. Grant, the area by Lake Providence was established as a supply depot and base of operations for the Vicksburg Campaign. The soldiers dug a canal between the Mississippi River and Lake Providence. The area was called "Soldiers' Rest". Grant subsequently moved his troops south for temporary residence at Winter Quarters south of Newellton in Tensas Parish. As slaves crowded into the camp at Lake Providence to gain freedom from surrounding plantations, the population quickly soared from a few hundred to several thousand. What began as a simple military supply camp quickly transformed into a city with a large population of African-American refugees.

By the time Vicksburg, Mississippi fell to the Union in 1863, most planters in the Lake Providence area had fled, and their plantations lay empty. The Union Army determined that they should be productive again.

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Historian John D. Winters, who was reared in Lake Providence, wrote in the mid-20th century about this period:

The long line of abandoned plantations was then leased by the army and treasury agents to carpetbaggers and to southerners who took the oath of allegiance (known as scalawags). Since the necessary Negro labor, farming implements, and mules were provided by the army, lessees were responsible only for feeding and clothing the Negroes until the harvest, when they paid off their obligations to the army and to the laborers, Yearly expenses ran between $5,000 and $30,000 on a plantation of a thousand acres, while profits might run higher than $200,000. There was little trouble finding lessees for the plantations.

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Winters also stated:

Many of the white lessees showed far less regard for their hired Negro laborers than the most negligent planter had shown for his slave. Negroes old, or infirm, or too young were weeded out and sent to Federal contraband villages and camps located along the river, where they had to be cared for by the provost marshals. In 1863 few lessees paid their labor except in food and clothing. For these items they often charged the Negroes five times the actual value, and at the end of the year the Negro was told that nothing was due him. Some lessees realized up to $80,000 profits, paid their labor nothing, and then boasted of their ability to swindle the Negro. A few lessees used their plantations for shipping out stolen cotton or for illegal trade. Provost marshals and labor agents often were bribed to shut their eyes to malpractices carried on by the lessees.

On July 29, 1863, at Goodrich's Landing south of Lake Providence, Confederate partisan Rangers surprised two companies of black troops in a small fort located on an Indian earthwork mound. They seized 200 prisoners. The Rangers burned cotton gins, plantation houses, and quarters on the plantations along the river and in the back country which were occupied by federal lessees. In June 1864, some Confederate troops raided the area south of Lake Providence, taking mules and horses, and African Americans.