Indian Bay is on the eastern bank of the White River, 4 miles (6 km) east of St.

[3] The area of Indian Bay has long been inhabited, as is shown by nine Native American mounds nearby, the largest of which covers more than an acre.

By the mid 19th-century Indian Bay had several stores, a cotton gin and a sawmill, and had developed into a prominent stop for steamboats traveling on the White River.

"Lamberton", a few miles north of Indian Bay in the no-longer existing community of Valley Grove, was started by Joel and Judith Lambert from Kentucky, who settled there in 1839.

William Mayo arrived in the area around 1853, bringing a large number of slaves and developing a plantation of several thousand acres.