The Early Indus period had seen the agricultural settlement of large parts of the Indus Basin and the emergence of a few settlements that were probably towns. In a short period of around a century or a century and a half from 2600 BCE, these settlements and the society of their inhabitants underwent a radical transformation, resulting in the emergence of the Indus civilization, a complex and highly organized society. Many changes, for example in craft specialization, were more of degree than of kind, but there were also significant innovations and transformations, such as the emergence of writing and the beginning of sea trade. While the transition was complete in some areas by 2500 BC, in others, such as the eastern region, it is probable that the Mature Harappan period started later.
More than three-fifths of Early Indus settlements, such as Balakot, were abandoned during the transition: In Cholistan, for example, only four out of the thirty-seven sites identified continued to be occupied. Many of the excavated towns were destroyed by fire: These included Kot Diji, Amri, Nausharo, and Gumla, though at Kalibangan an earthquake was the probable reason for the town's destruction and abandonment. When these settlements were reoccupied, both local and Mature Harappan pottery styles were in use for a while, suggesting the introduction into the local culture of a new tradition developed elsewhere. At Kunal, a number of hoards were found: One was a collection of silver and gold objects including two silver tiaras and a silver bangle; others contained beads of semiprecious stone and copper and stone tools. Some of these towns were replaced by new settlements in the same location, sometimes in a short period of time, sometimes after two or three generations, but most of the earlier settlements were not reoccupied. Instead, there were a great many new foundations, including more than a hundred and thirty in Cholistan. Those established in Sindh possibly included the great city of Mohenjo-daro. (There is disagreement on the date of the waterlogged earliest levels there, known only from small soundings, though the pottery from the earliest levels is probably of the Kot Diji period.) An important exception to the general pattern was Harappa, which, far from being abandoned, enjoyed continuous development from the Kot Diji period into the Mature Harappan period (also known as the Mature Indus period), during which features characteristic of the Indus civilization gradually emerged.
Many of the new settlements seem to have been constructed according to a plan, with wide, cardinally orientated streets, brick wells and drains, and well-appointed houses using bricks made to a standard size. In the larger settlements, baked brick was frequently used for construction as well as mud brick. Often these settlements had a surrounding wall; for example, a substantial mud brick wall was constructed around Nausharo, which seems to have taken over from Mehrgarh, now abandoned, as the regional center of the Kachi plain. Kalibangan was transformed from a single-walled settlement into a town with an elevated mound (citadel), divided into two walled sectors, and a lower walled town to its east, an arrangement found in a number of other
Indus settlements. In the small settlement of Kunal, the previous pit houses were replaced by rectangular houses of mud brick, some with clay-lined grain silos, and rubbish pits and jars for waste water were provided in the streets. Mohenjo-daro was constructed in part on massive clay and mud brick platforms, as a defense against the prevalent risk of flooding. Platforms were also constructed at Harappa and the town underwent considerable growth. At Dholavira in Gujarat, which had seen a small earlier occupation, a massive wall was built to enclose a new planned settlement whose residential area later expanded onto open ground north of the walled settlement. These three settlements suggest the emergence during the transition of regional centers, a higher tier in the settlement hierarchy. Another such center was founded at Ganweriwala, sited in the Saraswati Valley equidistant between Mohenjo-daro and Harappa; unfortunately, because this has not been excavated, nothing is known of it except that it attained a size of 80 hectares or more during the following Mature Harappan period. Rakhigarhi, located a similar distance from both Harappa and Ganweriwala, was to become the fifth regional center. The excavations there have not distinguished a separate transitional phase, but there is a marked contrast between the Sothi-Siswal settlement and the huge walled settlement of the subsequent Mature Harappan period.
At the same time other signs of greater complexity were emerging. Within these cities and towns the range and sophistication of craft activities greatly increased, and there are indications of developing specialization. The development of special craft objects, of exotic or rare materials or of fine or time-consuming workmanship, and the appearance of artifacts ideologically endowed with special significance reflect increasing status differentiation. New styles and varieties of artifacts appeared, including metal vessels, and bronze came into widespread use. At the same time the various regional styles of pottery and other artifacts were superseded by standardized Mature Harappan products after 2500 BCE. Some regions were less closely integrated: The inhabitants of Saurashtra and the North Gujarat plain (Sorath Harappan) and southern Baluchistan (Kulli culture) maintained their own character, showing some significant differences from the classic Mature Harappan culture in Sindh and other core regions. The rest of the borderlands formed no part of the Indus realms. Kot Dijian material continued in use (Late Kot Diji period) in northern Baluchistan, where Rehman Dheri flourished as a regional urban center, and was quite distinct from the culture of the plains. Mundigak became part of the Helmand culture, and the major route through Central Baluchistan, which had linked the Iranian plateau and Turkmenia with the Indus plains, was abandoned.
One of the key developments of this period was the emergence of a writing system. Seals with simple designs had been used in the Early Indus period, when there had also been marks made on pottery: Both are likely to have been connected with administrative or organizational functions. During the transition period, however, this simple range of signs developed into what is generally taken to be a complete writing system. This script was used on seals that now bore an inscription and an image, drawn usually from a limited repertoire of animal representations. An intermediate stage in this development may be seen at Kunal, where six square stamp seals of gray stone were found. These bore a geometric motif but resembled typical Mature Harappan seals in being square with a boss on the back. The development of seals and writing suggests the emerging need for more complex administration and record keeping.