The Native Land Court is established

Rights to Māori land were customarily held by iwi or hapū (sub-tribes), and individuals drew their rights from membership of those groups. For most of the period from 1840 to 1865 only the Crown could buy Māori land. The Native Lands Act 1862 waived this Crown right of pre-emption, so Māori could sell to private buyers once a court had investigated the title. It let the governor set up courts of Māori assessors or jurors under the local resident magistrate. The first was set up in the Kaipara district in April 1864, but because of the wars the 1862 Act operated only in a few places, mainly Northland. Te Ara estimates that in 1860 Māori owned about 75% of the North Island; NZHistory gives about 80%. Francis Dart Fenton, a Crown law officer who had helped draft the 1862 Act, agreed in January 1865 to become chief judge of a new court, on condition that he held the post on good behaviour rather than at the government's pleasure.

Fenton drafted the Native Lands Act 1865, which became law on 30 October 1865. It created a formal court of record with salaried judges assisted by Māori assessors. The court investigated who owned a block, issued a certificate of title, and the owners then received a Crown grant, which gave them a freehold title they could sell, lease or borrow against. The Act said that 'no certificate shall be ordered to more than ten persons', and that a block of 5,000 acres or less could not be granted to a tribe by name. Larger blocks could in theory be granted to a tribe, but Te Ara says this apparently never happened. The ten may have been meant as trustees for everyone else, but once they received Crown grants they became the legal owners, and could manage and sell the land for their own benefit. NZHistory concludes that all other tribal members were effectively dispossessed. Between November 1865 and June 1872 the court issued titles to 5,013,839 acres, mostly in the Auckland, Wellington and Hawke's Bay provinces.

Any 'interested Māori person' could apply for a hearing, and speculators often persuaded individuals to sell before other owners knew. Hearings were often held far from the land, and claimants had to attend in person, pay for food and lodging, and meet court, survey and legal costs. Lawyers, shopkeepers and surveyors gave credit while cases dragged on, and many sold the land they had been defending to settle their debts. The Ngāti Kahungunu chief Rēnata Kawepō won a series of cases against speculators in Hawke's Bay but then had to sell much of the land to pay his costs. The court became known as 'te kōti tango whenua' (the land-taking court), a phrase first used in 1867 by a Crown agent, Captain Reginald Biggs. The Native Lands Act 1873 abolished the ten-owner rule and required every owner to be listed. As shares passed to descendants, titles became crowded with owners, a problem that has grown ever since.

Te Ara quotes Henry Sewell, whom it calls justice minister, as saying the court was meant 'to bring the great bulk of the lands in the Northern Island … within the reach of colonisation' and to achieve 'the detribalisation of the Māori – to destroy, if it were possible, the principle of communism upon which their social system is based'. Te Ara cites the parliamentary debates of 1870, the year Sewell became minister of justice. NZHistory gives similar words without 'detribalisation' and links them to his return to office in 1865. The historian Judith Binney called the 1865 Act an 'act of war'. Te Ara says historians disagree about the court's exact role in land loss, but the court provided the means by which most Māori land passed out of Māori ownership. NZHistory estimates that Māori held about 40% of the North Island by 1890, nearly 27% by 1910 and about 9% by 1939; these figures include land taken by confiscation (see New Zealand Settlements Act — raupatu). As the Māori Land Court, the court still operates today under Te Ture Whenua Maori Act 1993.