The Immigration Act passed in 1907 updated the 1882 Immigration Act and 1891 Immigration Act. The head tax was increased to $5 and "imbeciles, feeble-minded persons, unaccompanied children under 17 years of age, and persons who are found to be and are certified by the examination surgeon as being mentally or physically defective, such mental or physical defect being of a nature which may affect the ability of such aliens to earn a living" were added to the excluded list. It was originally intended to exclude every male who had not $25 in his possession ($15 for women). However this clause was removed before it was passed by Congress.

Congress continued to exert Federal control over immigration with the Act of March 2, 1895, which upgraded the Office of Immigration to the Bureau of Immigration and changed the agency head's title from Superintendent to Commissioner-General of Immigration. The Act of June 6, 1900, further consolidated immigration enforcement by assigning both Alien Contract Labor law and Chinese Exclusion responsibilities to the Commissioner-General. Because most immigration laws of the time sought to protect American workers and wages, an Act of February 14, 1903, transferred the Bureau of Immigration from the Treasury Department to the newly created Department of Commerce and Labor.

Attention then turned to naturalization, a duty assigned to Congress by the Constitution but carried out by "any court of record" since 1802. A commission charged with investigating naturalization practice and procedure reported in 1905 that there was little or no uniformity among the nation's more than 5,000 naturalization courts. Congress responded with the Basic Naturalization Act of 1906, which framed the rules for naturalization in effect today. The 1906 law also proscribed standard naturalization forms, encouraged state and local courts to relinquish their naturalization jurisdiction to Federal courts, and expanded the Bureau of Immigration into the Bureau of Immigration and Naturalization.

To standardize naturalization procedures nationwide, the new Naturalization Service collected copies of every naturalization record issued by every naturalization court. To prevent fraud, Bureau officials checked immigration records to verify that each applicant for citizenship had been legally admitted into the United States. When the Department of Commerce and Labor divided into separate cabinet departments in 1913, the Bureau of Immigration and Naturalization divided into the Bureau of Immigration and the Bureau of Naturalization. The two bureaus existed separately within the Department of Labor until 1933.

The Immigration Service took form during an unprecedented rise in immigration to the United States. While Congress continued to strengthen national immigration law with acts such as the Immigration Act of 1907, a Presidential Commission investigated the causes of massive emigration out of Southern and Eastern Europe and a Congressional Commission studied conditions among immigrants in the United States. These commission reports influenced the writing and passage of the Immigration Act of 1917, which, among other provisions, required that immigrants be able to read and write in their native language. The Immigration Service then began administering literacy tests.

The outbreak of World War I reduced immigration from Europe, but also imposed new responsibilities on the agency. Internment of enemy aliens (primarily seamen who worked on captured enemy ships) became a Service function. Passport requirements imposed by a 1918 Presidential Proclamation increased agency paperwork during immigrant inspection and deportation activities. The passport requirement also disrupted routine traffic across United States land borders with Canada and Mexico, and the Immigration Service consequently began to issue Border Crossing Cards.

Mass immigration resumed after the war, and Congress responded with a new immigration policy, the national origins quota system. Established by Immigration Acts of 1921 and 1924, the system limited immigration by assigning each nationality a quota based on its representation in past United States census figures. The State Department distributed a limited number of visas each year through United States Embassies abroad, and the Immigration Service only admitted immigrants who arrived with a valid visa.