In 1996, Les Magnusson was elected mayor of Steinbach, the first non-ethnic Mennonite to hold that position, and Steinbach was incorporated as a city on 10 October 1997.
Magnusson was a vocal opponent of attempts in Steinbach to allow liquor sales.

In 2000, the windmill at the Mennonite Heritage Village, a recognized symbol of the city, was destroyed by arsonists.
It was rebuilt less than a year later with the assistance of Dutch millwrights.

Steinbach attracted prominent attention in 2004 when Mennonite author Miriam Toews, who was born and grew up in Steinbach, published her novel A Complicated Kindness.
The book became a bestseller, exploring a fictionalized town modelled after Steinbach.
It won the 2004 Governor General's Award for Fiction, and was selected as the 2006 book for Canada Reads, the first book by a female writer to be chosen.

Steinbach continued to grow during Magnusson's tenure and, after the election of Chris Goertzen as mayor in 2006, became one of the fastest-growing cities in Canada.
In 2011 Steinbach was officially announced as Manitoba's third-largest city, with the release of the population data from the 2011 Canadian Census.
The growth was attributed to immigration from such countries as Germany, Russia, and the Philippines.
Steinbach gained national recognition from such newspapers as The Globe and Mail, which described the city as an immigration "hotbed" of Canada and a model for immigrant integration.

During March 2013 the city gained national attention when several community members, such as the Southland Community Church and Steinbach Christian High School expressed opposition to provincial Bill 18, an anti-bullying bill that would require the accommodation of Gay-straight alliance groups in schools, including faith-based private schools.
On 13 September 2013 Bill 18 passed without amendments.
Partially in response to this issue, the city's first Steinbach Pride parade was held in 2016.
While initially expecting about 200 people, approximately 3,000 people attended the event.
This was brought about in part from the fact that not a single elected official from the area attended or endorsed the event.

Ongoing rapid growth meant that the city needed more land and space in order to sustain itself.
 This led the city to negotiate an annexation of 2,800 acres (11 km²) from the Rural Municipality of Hanover in 2015, the first major annexation for the city since 1979.
Steinbach was affected by the COVID-19 pandemic beginning in August 2020 with the virus affecting community members, several businesses, and eventually an outbreak at Bethesda Place, the personal care home at Bethesda Regional Health Centre.
In 1996, Les Magnusson was elected mayor of Steinbach, the first non-ethnic Mennonite to hold that position, and Steinbach was incorporated as a city on 10 October 1997. Magnusson was a vocal opponent of attempts in Steinbach to allow liquor sales.
In 2000, the windmill at the Mennonite Heritage Village, a recognized symbol of the city, was destroyed by arsonists. It was rebuilt less than a year later with the assistance of Dutch millwrights.
Steinbach attracted prominent attention in 2004 when Mennonite author Miriam Toews, who was born and grew up in Steinbach, published her novel A Complicated Kindness. The book became a bestseller, exploring a fictionalized town modelled after Steinbach. It won the 2004 Governor General's Award for Fiction, and was selected as the 2006 book for Canada Reads, the first book by a female writer to be chosen.
Steinbach continued to grow during Magnusson's tenure and, after the election of Chris Goertzen as mayor in 2006, became one of the fastest-growing cities in Canada. In 2011 Steinbach was officially announced as Manitoba's third-largest city, with the release of the population data from the 2011 Canadian Census. The growth was attributed to immigration from such countries as Germany, Russia, and the Philippines. Steinbach gained national recognition from such newspapers as The Globe and Mail, which described the city as an immigration "hotbed" of Canada and a model for immigrant integration.
During March 2013 the city gained national attention when several community members, such as the Southland Community Church and Steinbach Christian High School expressed opposition to provincial Bill 18, an anti-bullying bill that would require the accommodation of Gay-straight alliance groups in schools, including faith-based private schools. On 13 September 2013 Bill 18 passed without amendments. Partially in response to this issue, the city's first Steinbach Pride parade was held in 2016. While initially expecting about 200 people, approximately 3,000 people attended the event. This was brought about in part from the fact that not a single elected official from the area attended or endorsed the event.
Ongoing rapid growth meant that the city needed more land and space in order to sustain itself.  This led the city to negotiate an annexation of 2,800 acres (11 km²) from the Rural Municipality of Hanover in 2015, the first major annexation for the city since 1979. Steinbach was affected by the COVID-19 pandemic beginning in August 2020 with the virus affecting community members, several businesses, and eventually an outbreak at Bethesda Place, the personal care home at Bethesda Regional Health Centre.
Steinbach, Manitoba