The Gold Rush stimulated the construction of more than local infrastructure: it made it urgent to shorten the trip from the East Coast to San Francisco. In 1849 Asa Whitney had already published the proposal for a transcontinental railroad from Chicago to California, and in 1856 Theodore Judah, the chief engineer for the Sacramento Valley Railroad, had traveled to Washington to present his project for a transcontinental railroad. A route was scouted in early 1861 by Theodore Judah, who was the chief engineer for the Sacramento Valley Railroad, Charles Marsh (a Canadian 49er), builder of several important ditches around the mining town of Nevada City, and Daniel Strong, owner of a drug store, in the Sierra Nevada gold town of Dutch Flat. The route followed the old California Trail to Dutch Flat then over Donner Pass and then down along the Truckee River. In 1863 Judah pitched the idea to investors. Four rich men agreed: Mark Hopkins, Charles Crocker, Collis Huntington and Leland Stanford (future founder of Stanford University, who had become governor of California in 1862). Neither of the four was a miner, but they all made their fortunes during the Gold Rush selling supplies to miners. The groundbreaking ceremony for the Central Pacific Railroad was held in Sacramento in 1863.

Between 1863 and 1865 very little was achieved, just about 80 kms of tracks going east. In 1865, in Auburn, the man in charge, the eye-patched James Strobridge, started hiring Chinese workers, many of whom worked for the California Central Railroad. Many of the others had arrived in Auburn for the gold. For example, Charlie Yue was a licensed gold assayer, possibly the first one in California born in China. Thousands more were imported from the Pearl River Delta. Charles Crocker is credited as the one who saw the advantage of hiring Chinese workers from the mines (and later also directly from China). Bloomer’s Ranch (northeast of Sacramento, near Auburn) may have been the first place where Chinese workers were employed. By 1869 about 15,000-20,000 Chinese immigrants had worked on the railroad. Their presence is documented in the wood engraving of the special correspondent of Harper's Weekly Newspaper, the artist Joseph Becker.

The Chinese dramatically increased the pace of construction. The railroad climbed the foothills and then crossed the Sierra Nevada via tunnels dug with dynamite at Donner Summit (today used by graffiti artists). Dynamite, made of nitroglycerin, had just been invented in 1867 by a Swedish chemist named Alfred Nobel, and was extremely unsafe. The Chinese managed impossible acts of engineering, for example the ledge cut (and sometimes dynamited) into the rock of the steep slope of Cape Horn (near Colfax) 400 meters above the American River. Once they were done with the tunnels through the Sierra Nevada, they crossed into the Nevada Territory laying the foundations for the future town of Reno (where the first train from Sacramento arrived in June 1868) and then began laying tracks in the Nevada desert in full summer heat (up to 49 degrees Celsius). They were probably unaware that they were employed on one of the great engineering projects of the century, and that they stunned the white population with their amazing collective work. The Chinese worked on the railroad with no interruption, even in winter, which is very snowy at that elevation and was particularly harsh in 1866–1867. Working on those unexplored mountains was dangerous even with good weather. The Chinese were paid less than white workers, and in 1867 they tried in vain to obtain a raise via the rare strike: the strike failed but it is notable for being the first large strike in the USA. Nobody knows the number of Chinese who died building the railroad. They were known by the white workers for their unusually varied diet, for eating with chopsticks, for drinking tea or at least hot water (which, incidentally, may have made them less prone to diseases like dysentery and so even more valuable as workers). Alas, they also had a reputation for consuming opium and alcohol , and for visiting Chinese prostitutes. It was the Chinese who laid the last rail of the transcontinental, but Alfred Joseph Russell’s iconic photograph of the meeting of the two railroads at Promontory Summit doesn't show any Chinese. (Strobridge, however, did pay tribute to them and later Charles Crocker's brother gave a speech in Sacramento that includes praise for the Chinese)

In May 1869 the western railroad reached the eastern one at Promontory Summit in Utah (the Union Pacific Railroad, which started in Nebraska) and thus the East Coast was connected with a western terminus in Alameda, near Oakland, from where ferries took passengers to San Francisco. Travel that had taken months could now be done in a few days. The transcontinental railroad shortened to six days the journey from Chicago to San Francisco and to ten days the journey from New York to San Francisco. It helped that, after annihilating the Fox and Sauk in Illinois and Wisconsin (1832) and the Seminole in Florida (1835), the USA gained full control of the Great Plains in a series of "Indian wars" during the 1860s, namely against the Arapahos, the Cheyennes and the Sioux (aka the Dakotas).

Railroads in Europe displaced the old economy of barge owners and horse-drawn vehicles but the transcontinental railroads simply settled a new world and created a new market. It also helped North-American railroad technology (steel rails, locomotives, comfortable rail cars) to become the best in the world. It also created new boomtowns that had nothing to do with gold: the village of Oakland mushroomed to 35,000 inhabitants in 1880, the second largest city in California after San Francisco.

The top beneficiaries, however, were the "Big Four": Crocker, Huntington, Stanford and Hopkins. Their Central Pacific Railroad had acquired control of the Sacramento Valley Railroad and the Western Pacific in 1865, and of the Southern Pacific (the western side of the southern transcontinental route to the Colorado River when it was still under construction) in 1868. In 1874 they even acquired the Occidental and Oriental Steamship Company to control shipping traffic with Asia. In 1883 they extended the southern transcontinental railroad to New Orleans and in 1887 they connected San Francisco with Oregon, all consolidated in the Southern Pacific Company in 1885. All of them built with Chinese labor.

The Transcontinental Railroad increased the agricultural trade with the East Coast and was therefore a boon to California ranches. As gold mining became less and less profitable, and foreigners were increasingly discriminated against, in the 1860s many Chinese went to work for ranches, especially those who had been farmers back in China. Conveniently, the completion of the railroad had left thousands of Chinese unemployed. The state of California did not allow Chinese immigrants to own land, and the USA did not allow them to become US citizens through naturalization (the Naturalization Act of 1790 stipulated that only a “free, white person” was entitled to become a citizen). Until that time, California ranches had mostly been used for cattle. Agriculture had been pioneered by the missions but the sparse population didn't justify large-scale farming, but now the population was such that demand for food outpaced demand for gold-mining supplies. De facto, Chinese immigrants changed the diet of Californians, originally heavily meat-based, because they started growing grains, fruits and greens.

The Chinese enabled white landowners to turn California into an agricultural powerhouse. For example, John North, a politician originally from Minnesota, had founded the southern California town of Riverside in 1870, near the rail junction of San Bernardino, but his crops were not successful until Chinese workers brought the know-how of picking and packing oranges and lemons. The region soon became a major producer of citrus fruit.

Many of the Chinese had farmed in the Pearl River Delta of southern China (in Guangdong province) and they knew how to turn the swamps on a delta into fertile fields. In 1861 the state of California passed the Swamp and Overflow Act which allowed private companies to drain the Sacramento-San Joaquin river delta for the purpose of fostering agriculture in the region. The Chinese applied their know-how to the Sacramento-San Joaquin delta, building a vast network of earthen levees that multiplied the agricultural land. Most of the workers who drained swamps and built levees were Chinese. Despite the animosity that was growing towards the Chinese, in January 1852 the new governor of California, John McDougal, speaking to the state parliament, recognized that they were essential for draining swamplands to turn them into fertile land, and therefore encouraged more Chinese immigration at the same time that California's parliament and many town governments were imposing restrictions (e.g. the town of Columbia in 1852 explicitly barred Chinese from mining) and at the same time that in several places white miners were ganging up to expel Chinese miners and steal their mines. Unfortunately, a few months later the third governor, John Bigler, gave a racist speech in which he called the Chinese immigrants a "coolie race", which officially turned them into a lower class of immigrants than white European immigrants. Nonetheless, after the 1861 law between three to four thousand Chinese laborers were hired to work in the Delta, and within two decades they built hundreds of kilometers of levees and drainage ditches, reclaiming some 350 square kilometers from the marshlands (the size of around 70 thousand football fields). By 1880 the Chinese had reclaimed enough delta marshland such that fruit orchards and farms multiplied and the first canneries appeared. Chinese levee-builders transformed the Sacramento-San Joaquin Delta swampland into prime farming land. On top of that, many Chinese settled in the reclaimed land and became farmers themselves. In 1880 the Chinese accounted for 38% of farming labor in the Sacramento region. They were also settling in the region around the Santa Clara mission (the future Silicon Valley); and by 1880 the Chinese accounted for 33% of farming labor in what is now Santa Clara County. They typically leased land from white landowners. In fact, agriculture became the first success story of the future Silicon Valley

The Chinese worked on reclamation and irrigation projects in San Joaquin County near Stockton and they began to farm the land that they had reclaimed. By 1880 there were 32 Chinese-owned farms in San Joaquin County, and by the turn of the century there were 50 Chinese owned farms employing about 3,000 Chinese laborers.

Chinese workers were also employed to build infrastructure. In North California they built trails and roads to Oregon and to northeastern California. The Chinese built both the Big Gap Flume and the stone walls of the Quick Ranch in Mariposa County. The Chinese built the Bartlett Toll Road east of Clear Lake. Joel Parker Whitney, who owned a large piece of land in Placer County, hired about 1,000 Chinese laborers to build roads and to grow fruit. Agostin Haraszthy's Buena Vista Vineyards in Sonoma County, considered the first modern commercial vineyard in California, employed mostly Chinese workers. Former Chinese gold miners also found employment in other kinds of mines such as borax mines in today's Lake County (after it was discovered in 1856) and in Death Valley, as well as the New Almaden mercury mine in today's Santa Clara County. In 1873 only 30,000 miners were left in California, and about 60% were Chinese. Chinese workers were ubiquitous in clothing and shoe factories as well as in the cigar industry: by 1866 half of the cigar factories were owned by Chinese and by 1870 more than 90% of the total labor force in the cigar industry was Chinese) By the late 1860s several factories were owned by Chinese immigrants and relocated in San Francisco's Chinatown.

The Chinese were also fishing, particularly off the coast of Monterey, in the San Francisco bay (like Hunter's Point), and north of the bay (like China Camp), and were often working in fish canneries.

Other veterans of the Transcontinental Railroad remained to work for the Central Pacific or joined other railway companies. A few months after completing the transcontinental railway, in November 1869 the Central Pacific connected Sacramento to San Francisco.

In September 1876 the Southern Pacific Railroad (owned by the same "Big Four" of the Central Pacific), using again Chinese labor, connected San Francisco and Los Angeles. Los Angeles had about six thousand people. The railway connected L.A. to the East Coast via San Francisco. That was the beginning of L.A.'s growth: by 1890 its population had increased to 50400 and it topped 100,000 in 1900. That railway included another engineering wonder: the Tehachapi Loop, created by about 3,000 Chinese workers. In 1881 Charles Crocker wrote to Collis Huntington that the railway was bringing in 8,000 Chinese from Guangdong province to work on the Tahachapi railway.

In 1877 Chinese railroad workers were employed in building an extension of the Southern Pacific Railroad through the San Joaquin Valley. When the project was completed and they were dismissed, the Chinese settled in the town of Hanford and took farming jobs. A vibrant local Chinatown of shops, restaurants, hotels, schools and a Taoist temple rose in Hanford.

A thousand Chinese worked on the railroad that crossed the mountains from San Jose to reach the sea in Santa Cruz, including a two-kilometer tunnel, which opened in 1880. Chinese railroad spread literally to every corner of the USA. Between May 1880 and September 1885 the Canadian Pacific Railway (busy building Canada's equivalent of the Transcontinental) employed about 20,000 Chinese, although most of them were new arrivals from the Pearl River Delta.

Some of the Chinese who had worked with nitroglycerine were hired in 1881 by the newly established Hercules plant in San Pablo Bay to produce dynamite. The underpaid Chinese workers lived in humble dormitories near the factory. Several workers died in explosions.

Many Chinese dismissed by the railroads and the mines ended up as woodcutters. After the railroad was completed in 1869, a town located near the Donner Summit tunnels in the forests near Lake Tahoe greatly benefited: Truckee became the gate to the lumber needed by the mines. Many Chinese of the railroad settled in Truckee, and in 1870 more than 25% of the population was ethnic Chinese.

Some Chinese tried to go back to mining, but the case of Bodie shows what happened to them. Gold had been found in 1859 north of Mono Lake, quite far from the original "gold country", on the other side of Yosemite. The town came to be known as Bodie from the name of the miner who had found gold, William Bodey. In 1878 one of the richest gold and silver ores of California was discovered, and for two years Bodie shipped significant amounts of gold and silver. Chinese miners, glad to leave the gold country where they were discriminated against and abused, were among the first to arrive in Bodie, but they were forbidden to mine and had to content themselves with opening shops. By 1880 there were several hundred Chinese (out of a population of 13,000) and they were shopkeepers, laundrymen, cooks, laborers, servants, dishwashers, a druggist, a restaurant owner, a hotel owner and some women.

California had run out of gold, but other minerals were discovered, unfortunately almost always in places where life was not easy, and Chinese workers were often employed. After borax was discovered in the desert of Death Valley, notorious for the scorching summer heat, a plant was built in 1883 near Greenland (today's Furnace Creek Ranch), the Harmony Borax Works. Most of the mine's workers were Chinese and the Chinese built most of the road from the plant to Mojave that was famously plied by mule-driven wagons.

Chinese immigration increased dramatically when the Gold Rush had already ended. The reason is simple. Those who had made money during the Gold Rush started restaurants and other businesses, and were in a position to invite the rest of their families to join them. At the same time the fortunes made in California by those who had left in 1849 and returned to China rich encouraged others to try their luck too in California.

The Chinese immigrants didn't write much about their experience, and so their voices are notably absent from historical accounts. The only Chinese who were fluent enough in the English language and powerful enough to get their opinions published were the rich merchants of San Francisco, like Norman Assing and Tong Achick; and they did speak up against the mistreatment of Chinese immigrants. But the thousands of Chinese laborers employed in mines and fields have been erased from history.

The Chinese soon became famous for another habit, besides working very hard: saving money. Despite their low salaries, several Chinese became rich enough to buy shops and even factories. California manufacturers grew rich by employing Chinese labor, but often their laborers became owners and then employed, in turn, other Chinese workers.

In 1850 the USA had a population of 23 million. Officially, there were only four thousand Chinese, mostly located in California. In 1860 the USA had increased to 31 million and the Chinese population had increased to 35,000. Chinese in California outnumbered immigrants from any other country. In 1870 the USA population was more than 38 million of which 64,000 were Chinese, 77% of whom in California.

Incidentally, in 1849 the Chinese also started moving to Cuba, a much longer trip. Thousands went to work in the Cuban sugar plantations.

The main inland town of the Central Valley between Los Angeles and Sacramento was Millerton, originally a military fort, Fort Miller, on the San Joaquin river. The town was devastated by floods in 1862 and 1867. In 1856 the citizens had expelled their Chinese population. Moses Church was a blacksmith who had arrived in California in 1852, traveling across the country by ox team with his wife and four children. In 1870 he was hired by a farmer, Anthony Easterby, to build a canal from the Kings River to wheat fields. At the time the region was almost a desert. In 1872 Leland Stanford was so impressed by the lush fields in the middle of the desert that he decided to build a station and then a city, Fresno, for his railway to Los Angeles. As usual, most of his workers were Chinese, and some settled in the area, founding Fresno's Chinatown. In 1874 the citizens of Millerton voted to move to Fresno. Moses Church went on to build hundreds of kilometers of irrigation canals which transformed the desert into fertile land. Stanford's Southern Pacific Railroad attracted immigrants. Fresno quickly became the agricultural and financial hub of the Central Valley, the main city between Los Angeles and the Bay Area.

The transcontinental railroads changed the demographics of California. For example, the railroads encouraged the production of wheat. The Central Pacific Railtoad promoted the Central Valley to the farmers of the Midwest, so much so that during the 1870s the Central Valley was probably the fastest growing region of California and by 1890 there were more Midwestern immigrants than North-eastern immigrants in California.