In 1783 the Northwest Territory came into control of the Americans with the Treaty Of Paris which was the treaty to end the American revolutionary war. After the land was handed over to the U.S., every state was claiming rights to different sections of the territory and it was a big mess for the government and all of the states. To settle this problem the government decided to claim it as just government land to be explored and turned into states at a later time. To set up rules and regulations of the Territory, and to partition out land to the people, the Northwest Ordinance was drawn up in 1787.
By the turn of the 19th century the Territory was being filled up by many, many settlers so congress made the Territory more manageable by splitting off part of the NW Territory to be separately governed. The newly created area of land was called the Indiana Territory, which included present day Indiana, Illinois, Wisconsin and Michigan. After the split was made, the rest of the Northwest Territory had a large enough population to be able to have states created out of the land.