On August 26, 1881, the tension between the two factions finally culminated in the gunfight at the OK Corral, thirty seconds which would long be remembered in history. The gunfight between Virgil, Wyatt and Morgan Earp, along with Doc Holliday, against five members of the Clanton Gang, would leave Billy Clanton, Tom and Frank McLaury dead. Virgil Earp took a shot to the leg and Morgan suffered a shoulder wound. As Wyatt stood, still stunned, Sheriff Johnny Behan appeared advising him he was under arrest. The Earps and Doc Holliday were tried for murder but it was determined that the Earps acted within the law. Virgil was later terminated as marshal for his role in the homicides.

On March 18, 1882, the cowboy gang killed Morgan Earp in retaliation for the OK Corral gunfight. The entire Earp party would leave with Morgan's body headed to California. However, Wyatt and Warren Earp, along with Doc Holliday would jump off the train in Tucson and spend the next year chasing down the members of the Clanton Gang and killing them one by one. However, neither the Earps nor Holliday would ever return to Tombstone.

On May 25, 1882 another fire devastated Tombstone, destroying most of the western half of Tombstone's business district, including the O.K. Corral. But the resilient citizens of the town would once again rebuild.

The Cochise County Courthouse was built in 1882. About the same time, the Bird Cage Theatre brought "culture" to the community, though it also served as a saloon, gambling hall and brothel. The New York Times called it, "the wildest, roughest, wickedest honky tonk between Basin Street and the Barbary Coast." That statement was well deserved, since the Bird Cage was the scene for twenty-six deaths during its eight years of business.

In 1886, a well was drilled striking water and the citizens were thrilled. However, what they didn’t realize was that this new found water would end the mining boom and almost end the town. Immediately, water began to seep into the many mines of the area. Though giant pumps were installed, the seepage could not be stopped. When a fire burned the pumps of the Grand Central Mine in 1886, the water claimed the mine for good. The disgruntled miners soon found new employment in the copper mines of Bisbee and other new mining towns. The nearby towns of Charleston and Millville completely died and Tombstone lost its boom-town status and began to fade.

In 1890, more sophisticated pumps were brought into the mines and they began to open increasing Tombstone’s population once again. However, by the turn of the century new flooding would begin that would entirely stop the mining for good.