The beginnings of serfdom in Lithuania can be traced from the end of the 14th century when Grand Dukes would gift land and peasants, known as veldamai, to Lithuanian nobles for their military service (cf. benefice). The practice was particularly popular during the reign of Vytautas (reigned 1392–1430) and Casimir Jagiellon (reigned 1440–1492). Grand Dukes also issued a series of privileges transferring veldamai further under control of the nobles. That allowed the nobles to establish large estates that had up to a few hundred peasant households (for example, Upninkai and Musninkai of Radvilos). The wealthiest nobles became magnates. According to estimated by Jerzy Ochmański based on the military census of 1528, the magnates (less than 1% of nobility) controlled about 30% of nobility landholdings.
At the same time, there were significant developments in Western Europe. The Age of Discovery and Commercial Revolution shifted the economic initiative from agriculture to trade and industry. Merchants began focusing on importing raw materials and exporting finished goods. As a result, the demand for agricultural products, primarily grain, had increased. That presented an opportunity for the Lithuanian nobles. Their economic activity shifted from military service (taking share of war loot, receiving benefices from Grand Duke) to agriculture (growing and exporting grain to foreign markets). There were significant motivations to expand arable land and ensure cheap and permanent workforce.
The reform began in 1547 in the Grand Duke's lands. It was made a law on 1 April 1557 and the process continued until the 1580s.
The Grand Duke was declared the owner of all peasants and their land thereby eliminating any remnants of allodial titles. The nobles that could not prove their noble status or land ownership had their land confiscated and their status reduced to a peasant. The Grand Duke's land was measured, evaluated for quality, and registered in a cadastre. Intruding parcels of land belonging to a noble were moved elsewhere to form a unified tract of land. This tract was then divided.
The land around the manor was assigned to folwark (Grand Duke's farm). Regulations said that each volok of folwark should have seven peasant voloks. Land assigned to peasant farms (the village) was located further from the manor. The surveyors attempted to draw as correct rectangle as possible. Peasant houses were often moved to form a linear settlement along the single road. The peasant land was divided into three equal fields to facilitate the three-field system of crop rotation. Each field was then divided into strips (Lithuanian: rėžius) and assigned to each serf household. That way each serf was assigned a strip in each field; the three strips measured one volok (about 21.38 hectares (52.8 acres)). Wealthier serfs with enough manpower were sometimes assigned additional land outside of the designated village; these farms were known as beyond-border (Lithuanian: užusienis). Poorer serfs shared one volok between 2 or 3 families. On average, each serf household had about 16 hectares (40 acres).
Since land was owned by the Grand Duke, peasants had to perform services and pay dues to the landowner in exchange for their use of their farms. The unit of such services was one volok. Initially, a peasant owning one volok had to work 2 days a week in the folwark (corvée; Lithuanian: lažas), depending on land quality pay between 4 and 24 grosz of feudal land rent (Lithuanian: činšas), and pay tribute by oats and hay (Lithuanian: dėkla). These feodal services increased significantly during the years.