Coal City is a small unincorporated community located in Jefferson Township, Owen County, in the U.S. state of Indiana.

In 1852, the village of Davidsburg was platted in Section 12, Town 9 north, Range 6 west, consisting of sixteen 6000 square foot lots, 100 by 60.

[4] Businesses began to move from Stockton to Coal City once its post office was established.

The completion of the Cincinnati & Terre Haute Railway through Coal City caused it to thrive.

It became a good trading and shipping point located in one of Indiana's richest coal fields.