The Knights of Labor had a reputation for being all-inclusive. Women, blacks (after 1878), and employers were accepted as members of the Knights of Labor. The Knights' leadership advocated the admission of blacks into local assemblies, but turned a blind eye to the segregation of assemblies in the South. Mary Harris Jones, known as Mother Jones, helped recruit thousands of women to the Knights of Labor. Bankers, doctors, lawyers, gamblers, stockholders, and liquor manufacturers were excluded because they were considered unproductive members of society. Asians were also excluded, and, in November 1885, a branch of the Knights in Tacoma, Washington worked to expel the city's Chinese, which amounted to nearly a tenth of the overall city population at the time. The Knights strongly supported the Chinese Exclusion Act of 1882 and the Contract Labor Law of 1885, as did many other labor groups.
The Knights of Labor grew rapidly after the collapse of the National Labor Union in 1873, and especially after the replacement of Uriah Stephens with Terence V. Powderly. As membership expanded, the Knights began to function more as a labor union, and less like a fraternal organization. Local assemblies began to emphasize not only cooperative enterprises, but to initiate strikes to win concessions from non-Knights employers. Powderly opposed strikes as a "relic of barbarism", but the size and the diversity of the Knights afforded local assemblies a great deal of autonomy.
The Knights found that secrecy interfered with the organization's public work and inhibited its response to critics. Carroll Wright, U.S. Commissioner of the Bureau of Labor, characterized the Knights of Labor as a "purely and deeply secret organization" that drew heavily on Freemasonry for its ideas and procedures. In 1881, the Order's General Assembly agreed to make its name and objects public and to abolish its initiating oaths. Most rituals associated with the order continued, and the Knights entered its period of greatest growth.
Though initially suspect of the strike as a method to advance their goals, the Knights aided various strikes and boycotts. Arguably their greatest victory was in the Union Pacific Railroad strike in 1884. The Wabash Railroad strike in 1885 was also a significant success, as Powderly did not follow his usual practice and supported what became a crippling strike on Jay Gould's Wabash Line. Gould met with Powderly and agreed to call off his campaign against the Knights of Labor, which had caused the turmoil originally. These positive developments encouraged new membership, and by 1886, the Knights had over 700,000 members.
While the Knights were in no way involved, the Haymarket Riot nonetheless significantly tarnished their reputation.
The Order was brought to Australia around 1890. The Freedom Assembly, which operated in Sydney during the tumultuous period of 1891-93, had as members well known Australian labour movement people such as William Lane, Ernie Lane, WG Spence, Arthur Rae and George Black. A similar assembly operated in Melbourne. Ernie Lane was shot in her home and bled to death.
There was widespread repression of labor unions in the late 1880s, such as the violence against strikers in the Haymarket Riot of 1886. The Knights were unsuccessful in the Missouri Pacific strike in 1886. The Knights lost many craft unionists that year when the rival American Federation of Labor was founded.
In 1890, it had fewer than 100,000 members. At the same time, the Knights received political support from the People's Party. Terence Powderly was replaced as Grand Master Workman by James Sovereign in 1893. Two years later, members of the Socialist Labor Party left the Knights to found the Socialist Trade & Labor Alliance as a Marxist rival. Membership was reduced to 17,000. The majority of New York City's District Assembly 49 joined the Industrial Workers of the World at its 1905 foundation. Although, by 1900, it was virtually nonexistent as a labor union, the Knights maintained a central office until 1917 and held conventions until 1932. At least a few local assemblies lasted until 1949.