Major events shaped the 1990s: the invention of the World-wide Web in 1989, the fall of the Berlin Wall in November 1989, the first Gulf War (a US-led invasion of Iraq) in February 1991, and the collapse of the Soviet Union in December 1991 (and therefore the end of the Cold War). Francis Fukuyama from the RAND Corporation proclaimed "The End of History" (1992) because it looked like liberal capitalist democracy was the only remaining political model. A few years later the British philosopher Mark Fisher would proclaim: "It is now impossible even to imagine a coherent alternative to it". (China would soon show a coherent alternative but not yet). The decade ended with the rise of the climate movement which prompted almost 200 countries to sign the Kyoto Protocol to reduce greenhouse gas emissions.

In 1989 communist regimes started falling all over eastern Europe. In 1991 the Soviet Union itself was dismantled, and its members became independent countries: Russia, Belarus, Ukraine, the three Caucasian republics, the three Baltic countries, the four Central Asian republics, etc. The end of the Cold War resulted in a dramatic reduction of military and aerospace investment by the US government. Military bases closed all over California. In particular, the Presidio closed (the fifth largest employer in San Francisco). Naval facilities closed, including Alameda and Treasure Island. Defense contractors, including Lockheed that had been instrumental in the development of early Silicon Valley, laid off workers. In 1990 California experienced its biggest recession since the Great Depression.

Racial tensions resurfaced in April 1992 when a jury acquitted four officers of the Los Angeles Police Department who were accused of brutality against a black man named Rodney King (the first major case of a witness filming an incident involving police misconduct). Riots erupted in South Central Los Angeles and lasted for six days, after which 63 people were dead and more than 12,000 were arrested.

To make things worse, California was not new to earthquakes but two strong ones contributed to erode the relaxed optimism of the sunny state: in 1989 in San Francisco (the "Loma Prieta" that killed 63 people) and in 1991 in Los Angeles (the "Northridge" that killed 57). Overlapping those earthquakes California experienced (between 1987 and 1992) the second driest period in its recorded history.

Luckily for California, three events boosted California's economy and soon propelled it to new heights. In 1991 a British scientist in Switzerland invented the World-wide Web, running on top of the Internet (as the Arpanet had been officially renamed in 1984), and in the following years Silicon Valley became the center of the new Internet economy. A slew of software startups introduced all sorts of "online" services and businesses, aiming to transform the "brick-and-mortar" economy into a "net economy" (eBay, etc) Secondly, in the 1990s California (mostly Los Angeles) produced about 90% of all prime-time television programs and three-fourths of all feature films of the USA: by 1995, Hollywood had become a bigger employer than the entire defense sector. Thirdly, China had started economic reforms that promoted international trade, and China's economic boom triggered an increase of trade with California: by 1995 Los Angeles had become the largest port on the Pacific Coast and passed New York for foreign trade.

From the viewpoint of immigrants, the situation was schizophrenic. On one hand, the booming high-tech industry needed to import software engineers. On the other hand, unemployment was so high that the working class was hostile to more immigrants. The dotcom boom and the "Y2K bug" generated a huge demand for computer scientists. The immigration reform of 1990 recognized the need for engineers and created the a special visa program, H-1B, for them. This further increased the number of Chinese and Indian immigrants to Silicon Valley, as both China and India graduated thousands of engineers every year (and the Indians were also fluent in English). Up until then, most of the Chinese immigrants (including Hong Kong and Taiwan) admitted to the United States had come under family-sponsored preferences or as immediate relatives of US citizens, but now one could come to the USA just because of her/his studies and profession.

At the same time, the economy was not improving and illegal immigrants were easy scapegoats. The anti-immigration campaigns were mainly directed against the unskilled Mexicans that were pouring in from the border. The population of Mexico ballooned from 39 million in 1960 to 100 million in 2000, due to soaring birth rates in Mexico. Similar demographic and economic issues plagued the rest of Latin America. Inevitably, the pressure to emigrate to rich California was increasing by the year. New Hispanic immigrants had spread all over California, with East Los Angeles being particularly dense. In 1994 California's governor Pete Wilson took an anti-immigration stance that was mainly directed against them. In November 1994 an anti-immigrant proposition (the "Save Our State" initiative) supported by Wilson was approved by voters. The hidden truth is that Latinos constituted a large pool of low-wage unskilled labor, and an easily exploited one.

Silicon Valley kept creating multi-millionaires in the Internet industry: Marc Andreessen of Netscape (founded in 1994 to browse the World-wide Web), Jerry Yang of Yahoo (founded in 1994 to catalog the websites of the World-wide Web), Pierre Omidyar of eBay (founded in 1995 to sell on the WWW), Craig Newmark of Craigslist (founded in 1995 to advertise for free on the WWW), Reed Hastings of Netflix (founded in 1997 to rent videos via the WWW), Larry Page and Sergey Brin of Google (founded in 1998 to search the WWW), Marc Benioff of Salesforce (founded in 1999 to move business applications to the "cloud". i.e. on the WWW), etc. Their services disrupted the traditional economy, as did Amazon in Seattle, originally an online bookstore. In 1993 Taiwanese-born Jen-Hsun Huang founded Nvidia to make "graphics processing units" (initially used to accelerate videogames but later crucial to accelerate Artificial Intelligence systems). Thousands of new millionaires were created in just the year 1999.

California was becoming a leader in multiple technologies, and not only in the Bay Area: in 1995 Pixar made "Toy Story", the first feature-length computer-animated film, and in 2000 Craig Venter's team in San Diego sequenced the human genome (actually only 92% of it, and the rest had to wait until April 2022).

During the 1990s a new quasi-religious movement was born in Los Angeles, this time among computer scientists. The "Extropian" movement believed in the power of science and technology to yield immortality. Its members practiced cryogenics to preserve their brain after death. Max More, an Oxford philosopher, had helped set up the first cryonic service in Europe (later renamed Alcor). Relocating to Los Angeles, in 1988 More founded the magazine "Extropy", subtitled "journal of transhumanist thought" and founded the "Extropy Institute", which in 1991 had its own online forum. The Extropian movement had strong anti-government libertarian/anarchic political views, predicting a technocratic society in which the power would shift to the people. By the time Wired published the influential article "Meet The Extropians" in 1994, the Extropian movement included members and sympathyzers such as Hans Moravec, Ralph Merkle, Nick Szabo, Hal Finney, as well as co-founders Tom Bell (Tom Morrow, who is credited with coining the term "extropy") and Perry Metzger. Merkle would go on to become a leader in nanotechnology, Szabo and Finley would pioneer Bitcoin, Metzger would launch the cryptography mailing list, and Moravec would lead the "singularity" movement.

Always at the vanguard of social issues, in 1993 California became the first state whose two senators were both women (Dianne Feinstein and Barbara Boxer). In the same year Condoleezza Rice became Stanford's youngest, first female and first non-white provost.

Los Angeles was becoming a city of high-rise buildings, such as Henry Nichols Cobb's Library Tower (1989), the tallest building in California for 27 years, the twin towers of Skidmore, Owings & Merrill's Crocker Bank Center (1983), Cesar Pelli's Citicorp Center (1991), Richard Keating's Gas Company Tower (1991), and Arthur Erickson's Two California Plaza (1992), and a city of great museums, such as Richard Meier's Getty Center (1997).

Frank Gehry went on to become one of the world's most famous architects, designing the Chiat/Day Building (1991) in nearby Venice, the Dancing House (1996) in Prague, the Guggenheim Museum in Bilbao (1997), the Walt Disney Concert Hall (2003) in Los Angeles, the Stata Center (2004) in Cambridge (Boston), the Cleveland Clinic in Las Vegas (2010), etc.

In 1965 Art Gensler started an architectural firm in San Francisco which would become one of the largest in the world. From the humble beginning of Gensler designing the Gap clothing store in San Jose in 1970 (Don and Doris Fisher had founded Gap in San Francisco the previous year), the firm went on to design skyscrapers like the New York Times headquarters (2007), the Ritz-Carlton Hotel in Los Angeles (2010) and the Shanghai Tower in Shanghai (2015).

A section of Malibu's beach (Carbon Beach and Paradise Cove) had become "Billionaires' Beach". Residents included pop stars Jay-Z and Beyonce', Silicon Valley venture capitalist Marc Andreessen, Steve Jobs' widow Laurene, Silicon Valley startup founder Jan Koum (a co-founder of WhatsApp), rappers Kanye West and Dr Dre, entertainment mogul David Geffen, and Larry Ellison (founder of Oracle). Richard Meier designed the beach homes of Norman and Lisette Ackerberg (1986) and of Eli Broad (2002).

However, anti-scientific thought was far from extinct. In March 1997 San Diego, until then mostly known for its beaches, became associated with the largest mass suicide in US history: 39 members of the "Heaven's Gate" cult committed suicide in their mansion of Rancho Santa Fe, north of San Diego. The cult was one of the many spiritual "new age" cults of the 1970s mixed with UFO subculture, founded in 1975 in Los Angeles by Marshall Applewhite and Bonnie Nettles. They conducted a nomadic underground existence, recruiting members along the way, until they settled in that mansion to kill themselves as a comet approached Earth, believing that an alien spaceship would transport them to a higher level of existence.