The 1920 Junior TT introduced a new Lightweight class for 250cc machines. Ronald Clarke on a Levis won that class and was on course for an overall win when he crashed at the 33rd Milestone on the last lap, finishing fourth. The next year Howard Davies beat Freddie Dixon and Hubert Le Vack to the Senior TT by 2 minutes 3 seconds on a 350cc Junior AJS. In 1922, the ACU made the Lightweight a race of its own. Geoff Davison won it on a Levis at 49.89 mph. The Junior went to the local Manx rider Tom Sheard on an AJS at 54.75 mph. Stanley Woods, riding a Cotton, crashed twice, lost an exhaust, had a fire in the pits, and somehow finished fifth. The decade had its character set early.

In 1923, the course took on a private road between Parliament Square and May Hill in Ramsey, replacing the old route via Albert Road and Tower Road. The course length was now 37.739 miles, fixed to 37.733 in 1938. The same year, Walter Brandish crashed and broke a leg on a corner between Creg-ny-Baa and Hillberry. The corner has been called Brandish Corner ever since. The first Sidecar TT race was held that year over 113 miles. Freddie Dixon and his passenger Walter Denny won it on a Douglas fitted with a special banking sidecar, at 53.15 mph. Tom Sheard came back in poor weather to win the Senior on a Douglas, his second TT win in two years. Stanley Woods, the man who had crashed and burned the year before, won the Junior on a Cotton.

An Ultra-Lightweight TT for 175cc machines arrived in 1924 with a massed start instead of pairs, and Jock Porter won it on a New Gerrard at 51.20 mph. In the Senior the same year, Alec Bennett on a Norton became the first rider to average over 60 mph for the whole race. The 1925 season pushed harder. Wal Handley won the Junior over six laps at 65.02 mph on a Rex-Acme, then won the Ultra-Lightweight on the same marque later in the week, becoming the first rider ever to win two TT races in a single week. Howard Davies returned to win the Senior on a motorcycle of his own manufacture, an HRD, at 66.13 mph, beating the works teams from his own garage.

By 1926 the course had been almost entirely tarmacked, including the narrow A18 Mountain Road, alcohol-based fuels had been banned, and the Italian manufacturers Bianchi, Garelli, and Moto Guzzi were arriving in force. The Lightweight race that year produced one of the most controversial moments in TT history. Italian rider Pietro Ghersi finished second on a Moto Guzzi and was promptly disqualified for using a different spark-plug than the one declared on his entry form. The Motor Cycle magazine dubbed it 'the Guzzi Incident,' and the resentment hung in the air for years. In the same week, Jimmy Simpson on an AJS set the first 70 mph lap in TT history, completing the course in 32 minutes 9 seconds at an average of 70.43 mph.

In 1927, Archie Birkin, brother of the Bentley Boys driver Tim Birkin, was killed in practice on a corner near Kirk Michael. The corner was renamed Birkin's Bend, and from 1928 onwards practice sessions were held on closed roads, a change that would save many lives in the decades to come. The 1928 Junior went to Alec Bennett, who took his fifth TT win using Velocette's newly developed 'positive-stop' foot gear-change. In 1929, Pietro Ghersi finally returned to the Lightweight class and led it for five laps on his Moto Guzzi, only to suffer engine failure that handed the race to Syd Crabtree; Ghersi did set the fastest lap. During the Senior race the same year, Wal Handley clipped a hedge at Greeba Castle, triggering a chain of crashes that swept up Jimmy Simpson, Jack Amott, and Doug Lamb. Lamb later died of his injuries on the way to Nobles Hospital. Charlie Dodson won the race at 72.05 mph. The decade closed faster than it had begun, but it closed with a funeral.