During the 1970s, Dubai continued to grow from revenues generated from oil and trade, even as the city saw an influx of immigrants fleeing the Lebanese civil war. Border disputes between the emirates continued even after the formation of the UAE; it was only in 1979 that a formal compromise was reached that ended disagreements. The Jebel Ali port, a deep-water port that allowed larger ships to dock, was established in 1979. The port was not initially a success, so Sheikh Mohammed established the JAFZA (Jebel Ali Free Zone) around the port in 1985 to provide foreign companies unrestricted import of labour and export capital. Dubai airport and the aviation industry also continued to grow.

The Gulf War of 1990 had a negative financial effect on the city, as depositors withdrew their money and traders withdrew their trade, but subsequently, the city recovered in a changing political climate and thrived. Later in the 1990s, many foreign trading communities – first from Kuwait, during the Gulf War, and later from Bahrain, during the Shia unrest – moved their businesses to Dubai. Dubai provided refuelling bases to allied forces at the Jebel Ali Free Zone during the Gulf War, and again during the 2003 Invasion of Iraq. Large increases in oil prices after the Gulf War encouraged Dubai to continue to focus on free trade and tourism.