The government of the Republic of Latvia began creating a penal system as soon as it took control of the territory it claimed. According to the international understanding, imprisonment was not only seen as the isolation of a person, but also included serious steps in ‘correctional practices’. The article deals with the first stage of the creation of a penal system in Latvia, of which the end can be linked to the ‘Instructions for Prison Employees’, the first law regulating prisons in the Republic of Latvia, which was passed on 16 April 1921. This stage coincided with the period when Latvia switched to peacetime order after the end of the War of Independence. By presenting an overview of the creation of the state penal system, the author highlights the most important steps taken by the prison administration, and the conditions the state prison system faced.