Its creation, and the opposition of CART's teams and drivers to take part in it, marked the start of 'the Split', a 12-year period of competition between rival series at the top level of American open-wheel racing that had lasting negative effects in the sport.

The series was the initiative of IMS president Tony George, who had left the CART Board of Directors in January 1994 after disagreements over the direction of Indy car racing, and its potential effect on the Indianapolis 500.

The Indy Racing League name was revealed on July 8, 1994, and its first set of rules was published later that year, but it encountered criticism and resistance from the established team owners that formed CART and its drivers, who derided the concept as a 'power grab' attempt from George.

Talks between both series in early 1995 resulted in the former delaying its new rules for 1997, instead adopting frozen regulations with 1995-and-older CART chassis with a fixed limit on how much a team could spend on its combination.

The '25/8 rule', intended to encourage participation at Orlando and Phoenix, left only eight positions open for at-large competitors, which was interpreted by most CART teams as a de facto 'lock out' for its 26-car field.

[1] As a result, CART would later schedule a second 500-mile race at Michigan International Speedway in direct competition with the Indianapolis 500, and established that teams would be stripped of their voting rights in the Board of Directors if they competed in an IRL event.

The rest of the IRL field was composed of new entrants, part-time drivers and a large contingent of rookies, which amounted for half of the starters (17 out of 33) at the Indianapolis 500, while leading detractors and most of the media to describe the event as a 'watered-down' affair.