In 1200, the territory that would become the Latvian Confederation had a population estimated at 250,000 - 350,000. The Second Baltic Crusade began when Albert arrived at the mouth of the Daugava with 25 ships and 500 Saxon troops. In 1202, Albert transformed his soldiers into a new military order called the Swordbrothers or the Livonian Brothers of the Sword. The building of Riga at the mouth of the Daugava began in 1201. Riga was to become the first city in the Baltic region and it joined the Hanseatic League in 1282. Riga became the capital and largest city in Lithuania with a population of about 10,000 c.1300. The German upper classes - churchmen, knights, burghers, administrators, their families and vassals - numbered no more than 10% of the population.

The Salaspils were the next people targeted by the Second Baltic Crusade and their two important centers had to be captured. Koknese was taken in 1207-8. The Sword Brothers captured the wife of Vivaldis, chieftain of Jersika, who then submitted and became an ally of Albert. To the northeast, was the Talava region (Letgallians) and Estonia. By 1216, Albert controlled Talava and southern Estonia. The Second Crusade was now at the eastern Russian border and the Russians felt threatened. Allying with the Estonians they fought the crusaders until 1227. In the West, the Couranians were attacking Swordbrother outposts, sometimes by sea. In 1230-1, the Couranians were defeated, much of their territory was overrun and many Couranians converted.

The Papacy had now approached an ambitious plan to take over the entire Baltic Sea coast from Prussia to lands in the northeast. The German Order was called in to take over lands to the north and east while the Sword Brothers were to move south and west against those Semigallians, Couranians and Prussians who were still pagan, as well as Lithuanians. The Chronicles of Henry of Livonia (1227) relate the wars that subjugated the Estonians, the Teutonic Knights were assisted by the collaboration of the indigenous Kauppo. In September 1235, a combined force of Semigallians and Lithuanians decisively defeated the crusaders. Almost the entire leadership of the Swordbrothers was killed, and the remnants of this order merged with the German Order to create the new Livonian Order. In the north, the Couranians and Semigallians revolted. On the Russian front in 1242, the Livonian knights were decisively defeated in a winter battle on a frozen lake by Prince Alexander Nevsky of Novgorod, when the order and the Pope foolishly decided to invade and convert the Orthodox Russians to Catholicism.

Nonetheless, the crusade began to wear down the Couranians and by 1267 they were exhausted and signed a peace agreement. The Semigallians remained as the last pagan society still fighting against the Livonian Order. In 1283 having defeated the Prussians, the German Order was finally able to send significant reinforcements to the Livonian army. In 1290, the last Semigallian stronghold fell to the Livonians and this Baltic crusade had ended. Livonia was in continual conflict with the Vatican and ridden by internal strife between its several elite classes: the church leadership, the Livonian Order, and the powerful burghers of Riga. By the mid 14th century, the largest landholder in the Confederation was the Livonian Order. From 1292-1330, Riga was continually at war with the Livonian Order, frequently asking the Lithuanians for assistance.

"By 1284, the Teutonic Knights fully subjugate the Old Prussians, who eventually become extinct as a people and are assimilated by Germans, Poles and Lithuanians." The German Teutonic Order now adopt the name Prussians for themselves. This period witnessed the subjugation, (at first forced) assimilation and gradual disappearance of five indigenous, tribal peoples of the Baltic littoral. The Livonian Confederation was formed from the territories and conversion of the indigenous peoples of the region: Couranians, Semigallians, Livs, Estonians, Sellians and Lettgallians. How these indigenous cultures became Christianized is not known in any detail, the surviving evidence and documents that might have spoken to this change are sparse and inadequate. However by c.1500, these names have almost disappeared from the written record indicating that these tribes has lost their cohesiveness, and much of their traditional culture. Germans and Christianized Balts increasingly perceived them as a 'new' group - christianized Latvians. Certainly the loss of their leadership class, made the continuance of tribal cohesiveness extremely difficult. Discrete tribal languages were lost, and a new language spoken by all may have evolved from Lettgallian.