This article examines state-society encounters in imperial Ethiopia through histories of exploitation and compromise. Focusing on the western province of Qellem, the article investigates Ethiopia's engagement with local rights claims over time, illustrating how the state was imagined, negotiated, and partially legitimated. The inherent incoherence within imperial state structures is traced back to the survival of nodes of indigenous power within territories conquered in the late nineteenth century. Peasant representatives, local elites, and Amhara governors and soldier-colonists engaged with the state to turn it to their benefit, or limit its excesses. Episodes of rebellion, withdrawal, and court arbitration punctuated a cycle of negotiation within which the role of the intermediary was key. Qellem experienced a state-making exercise that was contemporaneous with, and comparable to, the formation of European colonial states elsewhere on the continent. As such, this article provides a radical challenge to dominant historiographical perspectives on imperial Ethiopia.