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The immediate post-WWII decades mark a critical turn in southern carceral power. During this period, southern policymakers dismantled a central pillar of Jim Crow criminal punishment: the chain gang system of convict labor. In dismantling the chain gang system, however, southern states created the foundation for the contemporary carceral state in the region, which today has the highest rates of incarceration and most active death row in the United States. In this paper, I ask what forces prompted southern policymakers to undertake carceral reform during this period and interrogate the effects of these reforms. In contrast with scholarship that emphasizes demagogic white conservatism as the main engine of late 20th century carceral expansion, I identify the origins of the South’s postwar prison-building boom in the changing structure of racial capitalism in the region. Drawing on original archival materials in the two case study states of Georgia and North Carolina, I argue that the emergence of Sunbelt capitalism—defined by the demise of sharecropping, the rise of “right to work” laws, new industry alliances with northern states and Western Europe, and the diversification of southern labor markets into defense, aerospace, and manufacturing—profoundly altered southern racial politics. Under the conditions of Sunbelt capitalism, the region’s metropolitan-based political elite sought to modernize the South’s penal system into a modern, professionalized, and bias-free system of criminal punishment. In the process, policymakers greatly expanded the South’s carceral machinery, building prisons and incarcerating people at unprecedented rates. The transformation from Jim Crow chain gangs to modern prisons, I argue, demonstrates that carceral modernization and reform often lead to devastating expansions to the punitive power of the state.