The state is younger than most of its cattle ranchers. On October 11, 1977, Brazil's federal government split the old Mato Grosso in two, with the division taking full effect on January 1, 1979. The southern portion absorbed the former Federal Territory of Ponta Porã along the Paraguayan border and became its own federal unit. Name debates followed the split. Pantanal was proposed, acknowledging the wetlands that draw tourists today. Maracaju was suggested, after the mountain range that runs north to south through the state. In the end the bureaucrats kept the parent's name with a directional suffix, and locals still drop the "do Sul" in conversation, calling it simply Mato Grosso.

The Tropic of Capricorn crosses the state's southern reaches, and from there two great river systems carry its wealth to the sea. Countless tributaries feed the Paraná River to the east. The Paraguay River defines the western border, integrating the state with Paraguay, Argentina, and the port of Caceres in Mato Grosso. Both belong to the Rio de la Plata basin, and both still carry commercial traffic. Iron and manganese ores, cement, timber, petroleum derivatives, and cattle move down the Paraguay. In 1999, sugar started leaving from Porto Murtinho. Two railway lines supplement the rivers. The Estrada de Ferro Noroeste runs 1,330 kilometers to reach Corumbá on the Paraguayan border, and the Ferrovia Norte Brasil has been pushing grain south from Rondonópolis since 1989.

Tourism concentrates in two places. The Pantanal, the inland marshes covering much of western Brazil, sprawls across the state with a variety of flora and fauna that shifts dramatically between flood and dry seasons. Twelve municipalities sit partly within it. Forests, sand banks, savannas, open pasture, and bushes alternate across the floodplain. The second destination is Bonito, in the Bodoquena mountains, which Brazil has named the country's best ecotourism destination sixteen times. The transparent rivers there draw snorkelers who drift through fish-filled water clear enough to read a book in. Nearby, the Gruta do Lago Azul cave opens onto an underground lake so blue it seems artificial. Caves, sinkholes, waterfalls, and natural swimming pools fill the Bonito-Jardim-Bodoquena tourist circuit.

If Mato Grosso do Sul were a country, 2020 data would have made it the world's fifth-largest oilseed producer. It grows 10.5 million tons of soy, harvests 49 million tons of sugarcane, and runs the fourth-largest cattle herd in Brazil at 21.4 million animals. The state slaughters over two million hogs a year and is climbing toward fourth place nationally in pork. In the northeast, around Três Lagoas, eucalyptus plantations feed a pulp and paper industry that has doubled and doubled again. Between 2010 and 2018 the state's round-wood output grew 308 percent. By 2019 it was Brazil's leading pulp exporter, shipping 9.7 million tons and claiming more than a fifth of all Brazilian pulp exports.

The Guarani-Kaiowá were the first peoples of this land, occupying the Nhande Ru Marangatu tropical rainforest and a far larger territory before non-indigenous contact in the 1800s. In the 1630s, Jesuit missionaries established short-lived missions among the Guarani in the Itatin region. Those missions were destroyed by Portuguese bandeirante raiders and by indigenous revolts against the colonial project. The present-day state still carries Guarani influence in place names and in the descendant communities that live here. According to a 2013 DNA study, the ancestral composition of Mato Grosso do Sul is roughly 59 percent European, 26 percent Amerindian, and 15 percent African, though an earlier 2008 study found a different balance. Whichever figures one trusts, the people who gave the rivers their names are still here.