The Sepoy Mutiny had impressed upon every Indian in different ways, including even the British living in England. Numerous got divided into pro-British and anti-British groups and sects. After the war came to an end, British army were successful to regain the states of Delhi, Kanpur, Lucknow, Gwalior and Meerut. The ruthless primary effect was that, thousands of native army-men were slaughtered mercilessly, without any valid reason. However, the British in London had highly justified these killings in the press. The last Mughal, Bahadur Shah II was exiled in Rangoon, where he breathed his last. The great revolt of 1857 also saw the historic ceasing of the rule of the British East India Company, and India was formally annexed under the direct rule of the Queen. New reforms, measures, administrative, economic and religious measures came into force, which were to govern the country for the next 200 years.

The ultimate effect concluded was that, British rule was not based on moral superiority but on armed forces, ruthlessly handled. The immediate consequence of the Sepoy mutiny was reorganisation of the military. Europeans troops were proportionally kept at safely a high level. The mutiny made English realise the extent of dissatisfaction among Indians thus leading to transfer of power and rule from hands of East India Company to the British government. In 1858, the Queen issued a proclamation saying that all were her subjects and that there would be no discrimination, appointments would be made on the basis of merit, and that there would be no interference in religious matters.

From the end of 1857, the British had begun to make headway again. Lucknow was recaptured in March 1858. On 8th July 1858, a peace treaty was signed and the war came to a close. The last revolutionaries were defeated in Gwalior on 20th June 1858. By 1859, rebel leaders Bakht Khan and Nana Sahib had either been murdered or had taken flight. Besides hanging the mutineers, the British had reintroduced some "blown from cannon" - an old Mughal punishment embraced many years before in India. It demanded a method of execution halfway between firing squad and hanging, but was more illustrative. The condemned rebels were planted before the mouth of cannons and blown to pieces. In terms of downright numbers, the victims were significantly higher on the Indian side. A letter published after the fall of Delhi in the "Bombay Telegraph" and replicated in the British press bore witness to the degree and nature of the vengeance - "…All the city people found within the walls (of the city of Delhi) when our troops entered were bayoneted on the spot, and the number was considerable, as you may suppose, when I tell you that in some houses forty and fifty people were hiding. These were not mutineers but residents of the city, who trusted to our well-known mild rule for pardon. I am glad to say they were disappointed".

Another brief letter from General Montgomery to Captain Hodson, the vanquisher of Delhi, unmasks how the British military high command sanctioned of the cold blooded butchery of Delhites: "All honour to you for catching the king and slaying his sons. I hope you will bag many more!"

Some British troops had borrowed a policy of "no prisoners". One officer, Thomas Lowe, recollected how on one occasion his unit had got hold of 76 prisoners - they were just too worn-out to carry on killing and needed a rest, he recollected. Later, after a hasty trial, the prisoners were lined up with a British soldier standing a couple of yards in front of them. On the order of "fire", they were all shot at once, "swept... from their earthly existence". This was not the only mass execution Lowe took part in - on another occasion his unit had caught hold of 149 prisoners, and they were queued up and simultaneously shot.

As a result, the end of the mutiny was succeeded by the execution of a cosmic majority of fighters from the Indian side, as well as huge numbers of civilians understood to be compassionate to the rebel cause. The British press and government did not recommend mercifulness of any kind, though Governor General Lord Canning tried to be compassionate to native sensibilities, earning the disrespectful nickname "Clemency Canning". Soldiers took very few prisoners and frequently executed them later. Villages were wiped out in a whole for apparent pro-rebel kindness. The Indians referred to this retaliation as "the Devil`s Wind." It is estimated that the death toll ran into the hundreds of thousands. However, the adverse effects of Sepoy Mutiny had also impressed upon the Britons back in England. It was a show of mockery. The degree and barbarity of the punishments handed out by the British "Army of Retribution" were considered mostly apt and reasonable in a Britain shocked by the onslaught of press reports about inhumanities carried out on Europeans and Christians. Such was the atmosphere - a national "mood of retribution and despair" that led to "almost universal approval" of the steps taken to placate the revolt.

Bahadur Shah II was tried for treachery by a military commission assembled in Delhi, and exiled to Rangoon where he died in 1862, bringing the Mughal dynasty to an end. In 1877 Queen Victoria assumed the title of Empress of India on the advice of Prime Minister, Benjamin Disraeli.

The revolt witnessed the termination of the British East India Company`s rule in India. The effect of the mutiny was now to have far-reaching impact in the lives of the `natives` for the next 200 years to come. It was although not unanticipated. In August, The Government of India Act 1858 formally dissolved the company and its ruling powers over India were transferred to the British Crown. A new British government department, the India Office, was created to deal with the governance of India, and its head, the Secretary of State for India, was entrusted with devising Indian policy. The Governor-General of India gained a new title (Viceroy of India), and enforced the policies formulated by the India Office. The British colonial administration embarked on a curriculum of reform, trying to amalgamate Indian higher castes and rulers into the government and eliminating endeavours at Westernisation. The Viceroy put an end to land grabs, ordained religious tolerance and included Indians into civil service, although primarily as subordinates.

The old East India Company bureaucracy essentially remained the same, though there was a major alteration in attitudes. In seeking for the causes of the Mutiny, the authorities settled on two things - religion and the economy. On religion it was felt that there had been too much intrusion with indigenous traditions, both Hindu and Muslim. On the economy it was now conceived that the prior attempts by the Company to bring in free market competition had subverted traditional power structures and alliances of loyalty, placing the peasantry at the clemency of merchants and money lenders. As an aftermath, the new British Raj was constructed in part around a conservative outline, based on a preservation of tradition and hierarchy.

On a political level it was also felt that the prior lack of consultation between rulers and the ruled had been yet another momentous factor in contributing to the rebellion. As an outcome, Indians were drawn into government at a local level. Though this was on a restricted scale, a crucial common law had been set, with the creation of a new `white collar` Indian elite, further motivated by the opening of universities at Calcutta, Bombay and Madras, a result of the Indian Universities Act. Thus, together with the values of traditional and ancient India, a new professional middle class was starting to spring up, in no way confined by the values of the past. Their aspiration can only have been stirred by Victoria`s Proclamation of November 1858, in which it is explicitly stated that "We hold ourselves bound to the natives of our Indian territories by the same obligations of duty which bind us to our other subjects...it is our further will that... our subjects of whatever race or creed, be freely and impartially admitted to offices in our service, the duties of which they may be qualified by their education, ability and integrity, duly to discharge."

Acting on these sentiments, Lord Ripon, viceroy from 1880 to 1885, broadened the powers of local self-government and sought to eradicate racial practices in the law courts by the Ilbert Bill. But a policy simultaneously liberal and progressive at one turn was ultraconservative and backward at the next, creating fresh elites and reasserting old attitudes. The Ilbert Bill only had the effect of causing a White Mutiny, and the end of the prospect of perfect equality before the law. In 1886 measures were taken up to curb Indian entry into the civil service. Militarily, the mutiny transformed both the "native" and European armies of British India. The British increased the ratio of British to Indian soldiers. Regiments, which had remained trustworthy, were kept back, and the number of Gurkha units, which had been fundamental in the Delhi campaign, was increased. The inefficiencies of the old organisation, which had alienated sepoys from their British officers, were addressed, and the post-1857 units were principally organised on the "irregular" system. (Before the rebellion, Bengal Infantry units had 26 British officers, who held every position of power down to the second-in-command of each company. In irregular units, there were only six or seven or even fewer European officers, who associated themselves far more closely with their soldiers, while more trust and duty was given to the Indian officers.) Most new units were recruited from among the so-called "Martial Races", which were not part of conventional Indian culture. Sepoy artillery was abolished also, leaving all artillery (excluding some small detachments of mountain guns) in British hands. The post-rebellion alterations formed the root of the military organisation of British India until the early 20th century.