Site-wide, assemblage-based lithic analyses help to elucidate community dynamics including variability in domestic economies, technological skill and decision making, exchange networks, and ritual practices. In this study we present the results of an analysis of over 36,000 lithic artifacts from the site of La Laguna, Tlaxcala. We compare Middle to Late Formative period (ca. 600–400 b.c.) and Terminal Formative period (ca. 100 b.c.–a.d. 150) deposits to examine transformations associated with urbanization and state formation during this interval. The residents of La Laguna had relatively equal and ample access to obsidian, and most production was organized independently by households. We identify blade production zones and variability in consumption patterns suggestive of different domestic, communal, and ceremonial activities. The introduction of bloodletters, elaborate large bifacial knives, and zoomorphic eccentrics to the Terminal Formative assemblage may indicate the emergence of higher statuses, new social roles, and militaristic symbolism during this period.