The Phelps and Gorham Purchase was the purchase in 1788 of the pre-emptive right to some 6,000,000 acres (24,000 km²) of land in western New York State for $1,000,000. This was all land in western New York west of Seneca Lake between Lake Ontario and the Pennsylvania border. The purchasers were Oliver Phelps and Nathaniel Gorham, both of Massachusetts, and the seller was the Commonwealth of Massachusetts. (In some discussions of this subject elsewhere, the Phelps and Gorham Purchase refers to all 6,000,000 acres (24,000 km&sup2) and in others it refers only to the 2,250,000 acres (9,100 km&sup2) upon which Phelps and Gorham managed to extinguish Indian title. This comes about because although Phelps and Gorham purchased pre-emptive rights to all 6,000,000 acres (24,000 km²), they were only able to extinguish Indian rights -- and obtain clear title -- to the portion east of the Genesee River.)

Following the American Revolution, western New York was opened up for development as soon as New York and Massachusetts compromised and settled their competing claims for the area in December 1786 by the Treaty of Hartford. The compromise was that, while New York would have sovereignty over the land, Massachusetts would have the "pre-emptive" right to obtain title from the Indians.

After a great deal of machinations by various speculators, on April 1, 1788, the entire Massachusetts pre-emptive right -- comprising some 6,000,000 acres (24,000 km&sup2) -- was sold to Oliver Phelps and Nathaniel Gorham, both of Massachusetts. The sales price was $1,000,000, payable in three equal annual instalments of certain Massachusetts securities then worth about 20 cents on the dollar. This sale was of the pre-emptive right for all land west of a line running from the mouth of Sodus Bay on Lake Ontario, due south through Seneca Lake, to the 82nd milestone on the Pennsylvania border near Big Flats (the "Pre-emption Line") all the way to the Niagara River and Lake Erie. Phelps and Gorham would not, however, own the land in fee until they extinguished all Indian titles.

Phelps and Gorham wasted no time in exploiting their purchase. On July 8, 1788, by the Treaty of Buffalo Creek, they extinguished Indian title to all land from the Pre-emption Line west to the Genesee River, as well as to lands west of the Genesee running south from Lake Ontario approximately 24 miles (39 km) and extending west from the river 12 miles (19 km) from "the westernmost bend of the Genesee," with this western boundary paralleling the course of the Genesee. This 184,300 acre (746 km&sup2) tract west of the Genesee was known as The Mill Yard Tract, so named because Phelps and Gorham asked the Indians for land west of the Genesee at the Falls so they could build a sawmill and gristmill. For this extinction of title, Phelps and Gorham paid the Indians $5,000, plus an annuity of $500. The area to which title was extinguished comprised some 2,250,000 acres (9,100 km&sup2), including the Mill Yard Tract.

Due to Phelps & Gorham's default on the 1790 instalment, the preemptive right to lands of the Phelps and Gorham Purchase west of the Genesee River, comprising some 3,750,000 acres (15,000 km&sup2), reverted back to Massachusetts on March 10, 1791. On March 12, 1791, Massachusetts agreed to sell the pre-emptive right to the lands west of the Genesee to Robert Morris for $333,333,33. The land was conveyed to Morris in five deeds on May 11, 1791. At that time, Morris was the richest man in America, as well as a signer of the Declaration of Independence, and financier of the American Revolution.

Morris then re-sold most of these lands in December 1792 and in February and July 1793 to the Holland Land Company (known as The Holland Purchase). Morris, however, reserved for himself 500,000 acres (2,000 km&sup2) in a twelve mile (19 km) wide strip along the east side of the lands acquired from Massachusetts, from the Pennsylvania border to Lake Ontario, known as The Morris Reserve. At the north end of the Morris Reserve, a 87,000 acre (350 km²) triangular shaped tract ("The Triangle Tract") was sold by Morris to Herman Leroy, William Bayard and John McEvers, while a 100,000 acre (400 km&sup2) tract due west of the Triangle Tract was sold to the State of Connecticut. In September 1797, Morris extinguished the remaining Indian title for all the lands west of the Genesee at the "Treaty of Big Tree" (Geneseo)

The Phelps and Gorham lands east of the Genesee River that had not already been sold were also acquired by Robert Morris in August 1790 -- some 1,200,000 acres (4,900 km&sup2) -- who re-sold them to The Pulteney Association.