Aurangzeb died in 1707 and Shahu returned to his people. In 1719, 16,000 Maratha cavalory accompanied the defeated viceroy of the Deccan to Delhi to demand their rights to Swarajya, Chauth and Sandeshmukhi, and they returned in triumph to Satara. Shahu reigned till 1749, a reign that saw the establishment of the Peshwa as an hereditary office. The first to hold was Balaji Vishvanath Bhatt, who had been so effective at Delhi; his son Baji Rao I procured Malwa outright and a holding in Gujarat. It was during this period that the four main Maratha chiefs and their clans- Holkar, Scindia, Gaekwad and Bhonsla- became strongly defined in power and territory: Holhar and Schindia in Malwa, Gaekwad in Gujarat and Bhonsla in Berar, a confederacy headed now by the Peshwas. 

The Maratha star began to wane and in 1761 they were disastrously beaten at Panipat by the Afgan Ahmed Shah Abdali. In 1772, on the death of a new young Peswa, Madha RaoI, and for the next 30 years, the five Maratha powers became increasingly independent of each other and, as the five deccan sultanates had done, they came in time to prey on each other, sometimes in league with one or other clan against a third but invariably bringing hardship and want upon the people held in their dominion, and entirely dissipating the unity of swarajya and of purpose that had made them, under Shivaji, the heirs apparent to the Moghul Empire. 

The British now began to play a strong part in Maratha affairs, if at first confusingly. In 1775 the Peshwa Raghunath had eventually felt constrained to ask for British help in maintaining his own position and the Company's Bombay Council gave that help by the treaty of Surat. The Calcutta Council objected and reversed this action in 1776 by a new treaty of Purandar; but in 1778 London ordered the Governor of Bengal, Warren Hastings, to reinstate the earlier support of Raghunath. This was the start of the first Maratha war and in 1779 the British were heavily defeated at Wadgaon. The war was ended in 1782 by the treaty of Salbai, with almost no appreciable change in the situation of 1775 except for the debilitating effect of nearly eight years of war. 

The British were disorganised: they were at war in North America, with France and Spain hostile, and in India there was war from 1780 with Mysore under Haidar Ali. By the treaty of Mangalore made with his successor, Tipu Sultan, they gained some peace but, more importantly, the realisation that they had in India at least withstood two powerful confederacies - without gain perhaps, but without giving ground. Almost at once the Marathas erupted into conflict among themselves. In 1802 at the Battle of Poona, Jaswant Rao Holkar beat Daulat Rao Scindia and the new Peshwa, Baji Rao II, who sought the help of the Governor-General, Wellesley, by the treaty of Bassein. Holkar then withdrew, leaving the Bhonsla Raja of Berar and Scindia to fight the second Maratha war with the British and the Peshwa, Gaekwad having remained neutral. Wellesley in 1803 at Assaye and Argaon, with Lake at Delhi and Aligarh, and Laswara at Scindia, broke the power of the Bhonsla Raja and Scindia, achieving great gains in land. Holkar, however, remained hostile and undefeated, and Wellesley was recalled. 

The Marathas were almost bankrupted by war and the British were distracted by Napoleon's successful wars in Russia and their own efforts to counter increasing French power in the East Indies. Into the resultant vacuum two new forces rose to terrorise India - the Pathans under Amir Khan but nominally serving Holkar, and the Pindaris, the pendhara freebooters who had attached themselves in the past to the Maratha armies. These wide-ranging groups of cavalry, especially the Pindaris, hit hard and indiscriminately, mustering and dispersing freely and fast, with no fixed base where they could be attacked. Hastings returned to India and by 1817 was ready to put his plan - to isolate the Maratha powers and eradicate the Pathan and Pindari menace - into operation; and with 14 divisions campaigning almost as independent armies, he succeeded. Though the deposed Peshwa's son, Nana Sahib, lived to fulminate on his wrongs and strike again at the British in the Mutiny massacre at Kanpur in 1857, for the time being, through outright defeat or by treaty, the British achieved supremacy in India. Amongst other victories they took the Maratha forts of Raigad, Purandar and Sinhgad, from where, in triumph, they carried off Shivaji's Bhavani sword.