Sultan Khalifa Bin Harub proved to be a moderate but influential ruler, and proceeded to guide Zanzibar through the first half of the turbulent 20th century with skill and diplomacy.

Soon after Khalifa gained power, changes were made to the British way of overseeing their interests in Zanzibar. In July 1913 responsibility for Zanzibar was transferred from the Foreign Office to the Colonial Office. The post of British consul became British Resident, subject to the control of the governor of the British East Africa Protectorate. At the same time a Protectorate Council was established. This was an advisory body with the sultan as president and the British Resident as vice-president.

During World War I the German and British armies, with conscripted African soldiers, were involved in several campaigns on the mainland. The war did not affect Zanzibar directly except for one incident when the British ship Pegasus was bombarded and sunk by the German ship Königsberg in Zanzibar Town harbour. (Graves marking the bodies of sailors killed in this incident can still be seen on Grave Island.)

Towards the end of the war, in 1917, the British army drove the Germans out of their territory and marched into Dar es Salaam. Khaled, who had tried to seize the throne of Zanzibar during 'the shortest war' in 1896, was still there and was captured. He was exiled to the Seychelles, then allowed to return to Mombasa in 1925 where he lived quietly until 1927.

After the war, the German East African territory was administered by Britain under a League of Nations mandate and called Tanganyika. Later, in 1920, the British East Africa Protectorate became known as the Kenya Colony.

In 1925 the British Resident on Zanzibar was made directly responsible to the Colonial Office in London, and a new Legislative Council was established. The ten-mile (16km) wide strip of land along the coast of Kenya, including Mombasa, which had been leased to Kenya in 1895 was still technically 'owned' by the Sultan of Zanzibar and the new Kenya government continued to pay the lease of £11,000 per year.

During World War II, Zanzibar was not involved in any military action. The war's main effect was to interrupt the supply of rice, a staple food for the Asian and African people, that had until then been imported from Burma.