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A long literature argues that state capacity is associated with positive development outcomes. Predictions about how state presence affects Indigenous communities, however, are considerably less clear. On the one hand, recent scholarship finds that the state has at times intervened on behalf of Indigenous communities to defend their land against extractive rural elites. Other work, however, demonstrates how government actors often used state capacity to facilitate extraction by local elites. In this paper, we attempt to reconcile these opposing predictions using sub-municipal variation in nineteenth-century state capacity in Peru. We demonstrate that state capacity was disproportionately targeted to Indigenous areas. Specifically, pueblo-level tenientes gobernadores (i.e., lieutenant governors who were formal agents of the central state) were assigned to majority-Indigenous areas in violation of the laws governing where these officials should be deployed. In majority non-Indigenous areas, by contrast, laws governing the deployment of tenientes were generally respected. Using a combination of novel datasets and qualitative process tracing, we examine whether these legal deviations emerged in response to either Indigenous groups' demands for tenientes or a desire by the state to exercise control over Indigenous areas.