The University was established in 1965 in response to a need for public higher education in southwestern Indiana. From its earliest stage of planning in the early 1960s, community leaders have supported the University by providing a solid base for its present success and future growth.
The University of Southern Indiana began as a regional campus of Indiana State University, opening on September 15, 1965. In 1967, Southern Indiana Higher Education, Inc., (SIHE) raised nearly $1 million to acquire 1,400 acres for the Mid-America University Center. Groundbreaking was held June 22, 1968. Since September 1969, the University has occupied 330 acres, mostly donated by SIHE. On April 16, 1985, legislation was signed which made USI a separate state university. All legal matters were effective July 1, 1985. On June 30, 2008, SIHE transferred ownership of over 900 acres of land and remaining assets to the USI Foundation.
The first student housing known as Mid-America Student Housing, Inc. (MASH) opened in 1984. These apartments are now the O'Daniel South apartments. In 1986, USI accepted a property gift from MASH, for the apartments adjacent to campus, what is known today as McDonald East apartments. SIHE transferred ownership of the student apartments to USI in 1994. Apartment areas were renamed to Joseph E. O'Daniel Apartment Complex and Frank F. McDonald Apartment Complex. USI opened its first suite-style residence hall in 1999, Newman Hall, and now has four residence halls. As of 2012, USI Housing and Residence Life can accommodate nearly 3,000 students.