The University of Southern Indiana began as Indiana State Unversity-Evansville in 1965, a branch campus of Indiana State University. Classes were originally held at a condemed elementary school on the west side of Evansville known as Centennial School (denoting the year it was built 1876). The property was leased from Bristol-Myers Squibb (which still has a large facility nearby). The conditions were very poor - the heat worked poorly, the building had no air conditioning and no screens for the windows.

In 1971 the school moved to its current campus on the extreme western edges of Evansville. The first buildings that were constructed were the Library (now the David L. Rice Library) and the University Center. Slowly the school built facilities, as funding was very tight during the Indiana State University-Evansville period.

It became clear that, if the university was to thrive, it would need to gain independent resources from what meager funding Indiana State University would set aside from year to year. The relationship with Indiana State University was an akward one, given the very different goals and needs of ISUE. In the early 1980s the process began to separate from Indiana State University. Finally Indiana governor Robert D. Orr signed the school's charter in 1985 and a new chapter was started in USI's history.

Post-1985 growth has continued at an astonishing rate. They established student housing, diversified the programs offered and enrollment almost doubled. In the late 1990s USI began to shift from a commuter campus to a residential campus that draws upon the entire state of Indiana as well as the rest of the mid-west. Campus housing is noteworthy, as nearly all students who live on campus (with the exception of some Freshmen, who are housed in extraordariarily modern suite-style facilites) are assigned large apartments with full kitchens, providing a level of comfort unheard of at other schools in the state.

A new building for the school of business, opened in 1990, was named in Governor Orr's honor (the Orr Center). Since then, four other large buildings have been built for the Liberal Arts, Nursing, and Education programs, as well as a gigantic new Fitness Center. The number of classrooms has more than doubled since the campus was first opened, but the university is still planning for continued growth. A new library is currently under construction (Planned opening in the fall term of [2006]). The current library building has a locked connection to the University Center which will be opened in 2006, when the Rice building will be used as an extension of the current University Center. That the administration has chosen to use the old building as a new part of the UC reflects the growing importance extracurricular organizations, such as the theater program and numerous academic clubs, in campus life. New buildings and much needed parking expansions will follow the completion of the new library.