The year 1876 saw intensive Indian campaigns extended by the army across the whole Northern Plains region. Troops came from posts in the Department of the Platte and swept most of the hostile Sioux and Cheyenne Indians out of present Wyoming, and participated in major engagements in southern Montana as well. By the time the campaigns drew to a seasonal halt in January of 1877, plans were under way for a series of military posts to provide bases from which the troops could prevent the Indians reoccupying their old hunting grounds. One of these posts was located on the west bank of Powder River, opposite the mouth of Dry Fork, and called at first, ''Cantonment Reno.'' Soon renamed ''Fort McKinney'' in honor of Lt. J. A. McKinney (killed in the battle with the Cheyenne on Red Fork of Powder River, November 25, 1876), this post was occupied through the spring of 1878. After considerable study, it was abandoned because of poor water, wood and forage supplies nearby, and the name transferred along with the troops to a new site on a broad terrace above Clear Fork of Powder River where that stream exits form the Big Horn Mountains. The new site was occupied and construction activities under way in July of 1878. The post at peak of development consisted of barracks for seven companies of troops, at least 14 structures for officer quarters, stables, warehouses, laundress quarters, a hospital, bakery, offices, and auxiliary structures.
Troops from Fort McKinney and neighboring posts were responsible for keeping the lately-hostile Sioux and Cheyenne from reverting to their old way of life in a vast region. They were supposed to keep the friendly Crows and Shoshoni from resuming their intermittent warfare with tribal enemies, and to prevent the Arapahoe from becoming embroiled with settlers and other tribes while officials pondered their disposition. They did this work well. They guarded communication lines that included the ''Rock Creek Stage Line'' which provided mail, passenger and express service from Rock Creek on the UPRR to Terry's Landing on the Yellowstone. They built and maintained the first telegraph line into the Powder River country.