In modern times Morrowind is ruled by five Great Houses: House Hlaalu, House Redoran, House Telvanni, House Indoril, and House Dres. Only three of these Houses have interests in Vvardenfell. The three Great Houses on Vvardenfell identify themselves by their traditional colors: red for Redoran, yellow for Hlaalu, and brown for Telvanni. Thus, members of House Hlaalu may be referred to collectively as Yellows.

The Great Houses traditions derive from ancient Dunmer clan and tribes, but now function as political parties. Dunmer Great House membership is largely a matter of birth and marriage, but Imperial colonists may also become retainers of a Great House, or may be adopted into a Great House. Initially an outlander may gain status in a house as an oath-bonded hireling, pledging exclusive loyalty to a single house and forsaking ambitions with all other houses. Later, after faithful service and advancement in lower ranks, an outlander may seek adoption into a Great House. Adoption and advancement to higher ranks in a Great House requires that a Great House councilor stand as sponsor for the candidate's character and loyalty. Finding a councilor to sponsor an outlander often involves performing a great service for the prospective sponsor.

House Redoran is one of the three Dunmer Great Houses with holdings on Vvardenfell. The Redoran prize the virtues of duty, gravity, and piety. Duty is to one's own honor, and to one's family and clan. Gravity is the essential seriousness of life. Life is hard, and events must be judged, endured, and reflected upon with due care and earnestness. Piety is respect for the gods, and the virtues they represent. A light, careless life is not worth living. Redoran settlements are designed in the Dunmer village style, built of local materials, with organic curves and undecorated exteriors inspired by the landscape and by the shells of giant native insects. Redoran villages are typically centered on Temple compounds and their courtyards, with huts and tradehouses gathered around a central plaza, as in the West Gash village of Gnisis. Ald'ruhn, the Redoran district seat, is exceptional, with its distinctive feature being the colossal prehistoric bug shell that has been adapted as the house's council house.

As a result of its close relationship with the Imperial administration, House Hlaalu has emerged as politically and economically dominant among the Great Houses of Vvardenfell and Morrowind. Hlaalu welcomes Imperial culture and law, Imperial Legions and bureaucracy, and Imperial freedom of trade and religion. Hlaalu still honors the old Dunmer ways -- the ancestors, the Temple, and the noble houses -- but has readily adapted to the rapid pace of change and progress in the Imperial provinces. Unlike the other Great Houses, which are largely hostile to non-Dunmer, House Hlaalu aspires to live in peace and harmony with the other races, and to share in the growth and prosperity of the Empire. Hlaalu public buildings -- tradehouses and craft guilds, manors and council halls -- are designed as simple multi-storied buildings roughly rectangular in plan, featuring arched entranceways and modest decorated exteriors. More modest one-story private dwellings follow the same plan, except with less decoration. Hlaalu plantation estates resemble Temple compounds, with walled precincts enclosing outbuildings for craftsmen and servants, dominated by a grand manor residence in place of a Temple shrine.

The wizard-lords of House Telvanni have traditionally isolated themselves, pursuing wisdom and mastery in solitude. But certain ambitious wizards-lords, their retainers, and clients have entered whole-heartedly into the competition to control and exploit Vvardenfell's land and resources, building towers and bases all along the eastern coast. According to Telvanni principles, the powerful define the standards of virtue, and the Telvanni are unwilling to allow the ambitious Hlaalu to dominate Vvardenfell's untapped resources by default. Telvanni architecture is dominated by the wizards' tower, a fantastic organic form grown and sculpted from stems, caps, and root-like holdfasts of the giant native mushrooms. Telvanni villages are comprised of smaller mushroom pods hollowed out for craftsmen and commoners. Open-air markets often include the giant cages displaying the wares of the slave masters.

House Indoril and House Dres are the two Great Houses without holdings or interest in Vvardenfell. Indoril District occupies the heartland of Morrowind, comprising the lands south of the Inner Sea and the eastern coast. The city of Almalexia is located in Indoril District, and the Indoril are orthodox and conservative supporters of the Temple and Temple authority. House Indoril is openly hostile to Imperial culture and religion, and preserves many traditional Dunmer customs and practices in defiance of Imperial law. Dres District is in the south of Morrowind, bordering the swamps and marshes of Black Marsh. House Dres is an agrarian agricultural society, and its large saltrice plantations rely completely on slave labor for their economic viability. Always firm Temple supporters, House Dres is hostile to Imperial law and culture, and in particular opposed to any attempts to limit the institution of slavery.