While Tecumseh lived along the White River, Native Americans in the region were troubled by sickness, alcoholism, poverty, the loss of land, depopulation, and the decline of their traditional way of life. Several religious prophets emerged, each offering explanations and remedies for the crisis. Among these was Tecumseh's younger brother Lalawéthika, a healer in Tecumseh's village. Until then, Lalawéthika had been regarded as a misfit with little promise. In 1805, he began preaching, drawing upon ideas espoused by earlier prophets, particularly the Delaware prophet Neolin. Lalawéthika urged listeners to reject European influences, stop drinking alcohol, and discard their traditional medicine bags. Tecumseh followed his brother's teachings by eating only Native food, wearing traditional Shawnee clothing, and not drinking alcohol.
In 1806, Tecumseh and Lalawéthika, now known as the Shawnee Prophet, established a new town near the ruins of Fort Greenville (present-day Greenville, Ohio), where the 1795 Treaty of Greenville had been signed. The Prophet's message spread widely, attracting visitors and converts from multiple tribes. The brothers hoped to reunite the scattered Shawnees at Greenville, but they were opposed by Black Hoof, a Mekoche chief regarded by Americans as the "principal chief" of the Shawnees. Black Hoof and other leaders around the Shawnee town of Wapakoneta urged Shawnees to accommodate the United States by adopting some American customs to create a Shawnee homeland with secure borders in northern Ohio. The Prophet's movement represented a challenge to the Shawnee chiefs who sat on the tribal council at Wapakoneta. Most Ohio Shawnees followed Black Hoof's path and rejected the Prophet's movement. Important converts who joined the movement at Greenville were Blue Jacket, the famed Shawnee war leader, and Roundhead, who became Tecumseh's close friend and ally.
American settlers grew uneasy as Indians flocked to Greenville. In 1806 and 1807, Tecumseh and Blue Jacket travelled to Chillicothe, the capital of the new U.S. state of Ohio, to reassure the governor that Greenville posed no threat. Rumours of war between the United States and Great Britain followed the Chesapeake incident of June 1807. To escape the rising tensions, Tecumseh and the Prophet decided to move west to a more secure location, farther from American forts and closer to potential Western Indian allies.
In 1808, Tecumseh and the Prophet established a village Americans would call Prophetstown, north of present-day Lafayette, Indiana. The Prophet adopted a new name, Tenskwatawa ("The Open Door"), meaning he was the door through which followers could reach salvation. Like Greenville, Prophetstown attracted numerous followers, comprising Shawnees, Potawatomis, Kickapoos, Winnebagos, Sauks, Ottawas, Wyandots, and Iowas, an unprecedented variety of Natives living together. Perhaps 6,000 people settled in the area, making it larger than any American city. Jortner (2011) argues that Prophetstown was effectively an independent city-state.
At Prophetstown, Tecumseh and Tenskwatawa initially worked to maintain a peaceful coexistence with the United States. A major turning point came in September 1809, when William Henry Harrison, governor of the Indiana Territory, negotiated the Treaty of Fort Wayne, purchasing 2.5 to 3 million acres (10,000 to 12,000 km2) of land in present-day Indiana and Illinois. Although many Indian leaders signed the treaty, others who used the land were deliberately excluded from the negotiations. The treaty created widespread outrage among Indians and, according to historian John Sugden, "put Tecumseh on the road to war" with the United States.