Slavery is a cultural system in which people are treated as property. Slaves are sold, traded, and forced to work for their "owners". It is unknown how long slavery has been practiced on Nirn, but the oldest mention dates back to the time of the Ayleids. Also known as the "Heartland High Elves", the Ayleids enslaved the Nedic humans. Among them was Saint Alessia, liberator of the slaves. After the Ayleids fled Cyrodiil and integrated with the Bosmer cultures in Valenwood, slavery did not re-emerge until much later, where beastfolk such as Argonians and Khajiit were enslaved by elves and men alike. In the Fourth Era, slavery has become a rare practice. Members of the Second Aldmeri Dominion, however, have been known to keep beastfolk slaves.
The Ayleids kept human slaves, when their empire ruled the Cyrodilic province. Generally, the Ayleids worshipped the Altmeri divines, but also dealt frequently with Daedric Princes for assistance in keeping their slaves in line. The Nords of Skyrim worshiped a distinct group of divines, who were much more sympathetic to humanity than merfolk. Alessia began to pray to these divines for assistance in freeing her people, in particular Kynareth, whom the Nords called Kyne.
Kynareth sent her son, the Nordic demi-god hero Morihaus, to advise and aid Alessia. During this period, Morihaus is usually identified as Alessia's lover, though the Song of Pelinal claims he was embarrassed at his appearance because of her. He helped her to rally the other slaves to her cause. From that moment she was known as the Slave-queen. Kynareth also sent Alessia visions that would aid her fight against her masters. The third of these visions was of another legendary figure of the First Era, the infamous Pelinal Whitestrake, who was sent to Alessia to become the leader of her army. Pelinal was a demi-god like Morihaus, possibly the son of Lorkhan.
Dunmer have traditionally permitted enslavement of Imperials, Nords, Orcs, Khajiit, and most importantly Argonians. They do not recognize the mistreatment of slaves of these races as a serious crime, other than as a crime against property. By the terms of the Treaty of the Armistice, Morrowind may define its own laws and customs, and slavery remains legal. For ages the Dunmer, particularly House Dres, have raided Black Marsh for slaves; though the Empire has made this illegal, the practice persists, and Dunmer and Argonians have a long-standing and bitter hatred for one another . Slavery is uncommon in Redoran and Hlaalu districts, but common in Telvanni Districts. The slavery finally ended in conflict and the Arnesian War started, although the war didn't help freeing the slaves.
Slavery is protected by law in Morrowind. Slavery is illegal throughout the Empire, and considered barbaric. Slavery had disappeared in the Summerset Isles and Valenwood long before their incorporation into the Empire. Most Imperial citizens assume the practice will die out as Morrowind adopts Imperial ways, and the subject excites little passion except among Argonian and Khajiit abolitionists, outraged that the Empire does little to suppress persistent illegal cross border slave raiding in southern Morrowind. House Dres is actively against Imperial activity in Morrowind, largely due to the Imperial policies against slavery. 
It is said that during the time period in which The Elder Scrolls Online takes place, slavery is still legal within the borders of Morrowind because of its belief and economic structure. However due to the Ebonheart Pact all Argonian slaves must be liberated. The main slave race is now Khajiit. However in the Summerset Isle, slavery of the native Goblins has always existed.
Dispite slavery's acceptance in Morrowind, there are still factions who assist in the freeing of slaves, the most famous being Twin Lamps. While the group existed long before Imperial involvement, they are assisted by outside sources, includes some withing the Thives Guild when it comes to freeing and smuggling slaves out of Morrowind.