On 10 March 1830 the KNIL was formed by royal decree.A separate military arm formed for service in the Netherlands East Indies. Its establishment coincided with the Dutch drive to expand colonial rule from the 17th century area of control to the far larger territories.

The KNIL was involved with the Padri War (1821–1845), the Java War (1825–1830), crushing the final resistance of Bali inhabitants to colonial rule in 1849, and the prolonged Aceh War (1873–1904).Bali was finally taken under full control with the Dutch intervention in Bali (1906) and the final Dutch intervention in Bali (1908).

In the nineteenth and early twentieth centuries, the KNIL prosecuted the conquest of the Indonesian archipelago. After 1904 the Netherlands East Indies were considered pacified, with no large-scale armed opposition to Dutch rule until World War II, and the KNIL served a mainly defensive role protecting the Dutch East Indies from the possibility of foreign invasion.

The KNIL was mainly involved with military policing tasks once the archipelago was considered pacified. To ensure a sizeable European military segment in the KNIL and reduce costly recruitment in Europe the colonial government introduced obligatory military service for all resident male conscripts in the European legal class in 1917.In 1922 a supplemental legal enactment introduced the creation of Home Guard (Dutch: Landstorm) for European conscripts older than 32.

No large-scale armed threat to Dutch rule existed until World War II.

The Indonesian archipelago supported various states, including commercially oriented trading states and inland agrarian states centuries before Europeans arrived. The first Europeans to arrive were the portuguese in the late 15th century. Following disruption of Dutch access to spices in Europe, the first Dutch expedition set sail for the East Indies in 1595 to access spices directly from Asia following disruption of Dutch access to spices in Europe . When it made a 400% profit on its return, other Dutch expeditions soon followed.