This article seeks to challenge essentialist comprehensions of rural Indigenous communities through examining one particular Mapuche community who were the recipients of a land subsidy. Mapuche people are the largest Indigenous group in Chile. Since the 1990s, the Chilean government, responding to calls for social justice, has purchased land and relocated Mapuche people, mostly landless or almost landless smallholder Indigenous peasants, to areas where they could own land. This study draws on qualitative data gathered from one Mapuche community throughout 2020 and early 2021. It examines the process by which these Mapuche Indigenous people became landowners, and the meanings of this transition for the rural community and households in terms of class differentiation. To this end, the article reflects on key aspects of rural everyday life, such as access to land and machinery. Firstly, it pays attention to the story behind the creation of a new Indigenous community, through analyzing the engagement of its members with the institutional path that was created by the Chilean State as a means of addressing Indigenous land struggles. This, in turn, shows how Indigenous communities can also be made while highlighting the disruptions triggered within such communities when engaging with these public schemes. Secondly, the article reflects on how the members of this new Indigenous community regard certain means of production, especially a communal tractor that was acquired through a Chilean State subsidy. In this respect, it shows how agrarian class formation is associated with these rural households’ perceptions regarding their co-owned tractor. Through investigating shifting notions of rural Indigenous communities, it is concluded that dynamics of agrarian class differentiation led to community development, as well as demarking the contours of individual rural households within each community.