This paper aims to study the interconnections between the military-institutional transformation and social organization in local Swedish society during the course of the Sixteenth century. During this period, the emerging new Swedish state bureaucracy transformed the largely autonomous peasant militia into state-controlled regular army units. In this process the political status, goals and agency of the upper peasant strata are studied. This social group applied novel strategies in order to adapt favourably to changes. Through cooperation and continuous bargaining with the emerging new state, this group largely lost its age-old martial identity in exchange for a new beneficial political position in local society. Thus, changes in the military organization also accentuated an increased social stratification within peasant society.