Disaster was to strike in the early hours of the 10 June 1886 with the eruption of Mount Tarawera. Te Puke residents were awoken with the noise and the many related earthquakes. Many had a good view of the eruption and paintings survive of their memories. Ash and mud showered over crops and pastures up to 12 inches deep in places. The sun was not seen until 1pm.

Stock faced starvation and many farmers were forced to let their animals free to fend for themselves. Some stock was shipped from the area but many died. The settlers became short of food and water themselves and help was gratefully received from Tauranga. Evidence of the Tarawera eruption can still be found in disturbed ground in the area today. (Te Puke was again covered in ash during the 1995 Ruapehu eruption though not to the same scale.)

Te Puke town-ship began to grow and a mission/town hall was built in 1883. This was used for town meetings and as a church by three of the congregations. The first school, (Te Puke Primary) was opened in 1883. The Te Puke Times was first printed in 1912. The fire brigade and town boards were both formed in 1913.

A jockey club was formed in 1890, the brass band in 1903, the A. & P. Society in 1905, the rugby union in 1906, the bowling club in 1908, and the golf club in 1912. Planting of the trees down the centre of the main street, a major feature of the town today, began during 1914-1918 as a war memorial to the fallen. A nursing home (still standing) was opened in Boucher Avenue in 1918 but any major cases were railed to Tauranga Hospital.

By 1913 the railway line was completed from Mount Maunganui to Te Puke, but was not connected to Tauranga until 1924 when the harbour rail-bridge was completed. By 1928, the rail line connected through to Auckland via Waihi. This finally ended the freight service by scow through Kaituna River and Canaan Landing. Roads were finally opened across the swamps and these helped open up much of the farming land that is in use today.