The land of New Albany was officially granted to the United States after the American Revolutionary War. The territory had been captured by George Rogers Clark in 1779. For his services Clark was awarded large tracts of land in Southern Indiana including most of Floyd County. After the war Clark sold and distributed some of his land to his fellow soldiers. The area of New Albany ended up in the possession of Col. John Paul.
New Albany was founded in July 1813 when three brothers from Albany New York—Joel, Abner, and Nathaniel Scribner—arrived at the Falls of the Ohio and named the site after their home. They purchased the land from Col. John Paul. New Albany was platted by John Graham on the land owned by the Scribner brothers. In 1814 Joel and Mary Scribner built their home in New Albany, the Scribner House still stands today.
New Albany was incorporated as a town in 1817 as part of Clark County. In 1819, three years after Indiana was admitted as a state, New Albany became the seat of government for newly established Floyd County. A courthouse was finally built in 1824. New Albany was incorporated as a city in 1839. It would remain one of the largest cities in the mid-west for the next 50 years.
In 1853 the New Albany High School opened, the first public high school in the state. The original school was built at the corner of West First St. and Spring St. New Albany would also be the first in the state to create a consolidated school district several years later.
Before the Civil War. Over half of Hoosiers with over $100,000 lived in New Albany making it by far the wealthiest part of the state.
Ashbel P. Willard, Governor of the State of Indiana and a native of New Albany , dedicated the Floyd County Fairgrounds in 1859. That year the Indiana State Fair was held in New Albany. During the Civil War the fairgrounds where converted to become Camp Noble and used as a muster point the areas regiments.
A new larger courthouse was built in 1865 which was used until the 1960s when the current City-County courthouse was constructed, also the first in Indiana.
During the American Civil War the trade with the South dwindled, and after the War much of Indiana saw New Albany as too friendly to the South. The city never regained its stature, remaining a city of 40,000 with only its antebellum/early-Victorian “Mansion-Row” buildings to remind itself of its boom period. New Albany’s robust steamboat industry ended by 1870, with the last steamboat built in New Albany named, appropriately, the Robert E. Lee.
During the second half of the 19th century New Albany experienced an industrial boom despite the collapse of the steam boat industry. The advent of the railroad created economic opportunity for the city as a pork packing and locomotive repair center. A bridge was built across the River in 1886 providing a rail and road connection with Kentucky. American Plate Glass Works opened in 1865 which employed as many as 2,000 workers. When the factory relocated in 1893 New Albany lost a large part of its population and went into economic decline.
In the early 20th century, New Albany became a center of plywood and veneer, and its largest employer was the New Albany Veneering Company. By 1920, New Albany was the largest producer of plywood and veneer in the world with other producers including Indiana Veneer Panel Company and Hoosier Panel Company.
Interstate 64 came through New Albany in 1961 and led to the construction of the Sherman Minton Bridge. The project cost 14.8 million dollars. The bridge was named for US Senator and later Supreme Court Justice Sherman Minton who was a native of nearby Georgetown and practiced law in New Albany. The bridge was named the "most beautiful long-span bridge of 1961" by the American Institute of Steel Construction.
Charles Allen Prosser lived in New Albany for much of his life. Charles Allen Prosser School of Technology was named in honor of his accomplishments as the "Father of Vocational Education." in the mid and late 20th century, New Albany became an innovator in using electronic media in education. New Albany High School, a public school, started WNAS-FM in 1949, which is the nation's oldest continuously operating high school radio station. In the late 1960s, Slate Run Elementary School started WSRS, a non-licensed student-produced closed circuit television service for its classrooms, one of the nation's first in an elementary school.
In January 1937 a terrible flood affected New Albany and the region. New Albany, like the other river towns, had no flood walls and no methods of regulating the river. The Ohio River rose to 60.8 feet at New Albany leaving most of the town under 10 or more feet of water for nearly three weeks. The flood would be the worst disaster to ever befall the city.
After the flood New Albany was the first city in the region to begin construction on massive flood walls around the city. New Albany's flood walls would serve as examples for those that would later be constructed around Louisville, and Clark County.
New Albany's Main Street features a large collection of late 19th century mansions from the city's heyday as a shipbuilding center. The centerpiece is the Culbertson Mansion, a three-story French Second Empire Style structure, which is today an Indiana state memorial.
Every October, the downtown area of New Albany is host to the Harvest Homecoming festival, one of the largest annual events in the state. Festivities begin on the first weekend of October, but the main part, consisting of midway rides, shows, and booths lining the downtown streets, lasts from Thursday-Sunday of the second weekend in October.
According to the United States Census Bureau, the city has a total area of 14.8 square miles (38.3 km²), of which, 14.6 square miles (37.9 km²) of it is land and 0.2 square miles (0.4 km²) of it (1.15%) is water.
There were 15,959 households out of which 29.6% had children under the age of 18 living with them, 42.5% were married couples living together, 16.1% had a female householder with no husband present, and 37.0% were non-families. 30.8% of all households were made up of individuals and 11.7% had someone living alone who was 65 years of age or older. The average household size was 2.31 and the average family size was 2.88.
In the city the population was spread out with 24.0% under the age of 18, 9.6% from 18 to 24, 29.2% from 25 to 44, 21.8% from 45 to 64, and 15.4% who were 65 years of age or older. The median age was 37 years. For every 100 females there were 88.5 males. For every 100 females age 18 and over, there were 84.6 males.
The median income for a household in the city was $34,923, and the median income for a family was $41,993. Males had a median income of $31,778 versus $24,002 for females. The per capita income for the city was $18,365. About 11.4% of families and 13.7% of the population were below the poverty line, including 21.6% of those under age 18 and 9.1% of those age 65 or over.