The Kaurna people were the original inhabitants of the land, although the neighbouring Ramindjeri tribe probably travelled through the valley as well. There is no recorded indigenous word for the site of the township. The present name honours South Australia's first Superintendent of Police, Henry Inman.

The first survey of the Inman Valley and Bald Hills area was done in 1839. Good reports of the area soon attracted settlers to take up land, including some prominent people such as T.B. Strangways, Judge Gwynne, and even Governor Henry Young, who bought land in 1850. The township gradually became established on its present site after section 269 was divided up into smaller holdings about 1870, and a church was built and school and post office set up.

The tough times of the 1870s saw a migration of people seeking better livings elsewhere. However, the town survived and although the church and school have now closed, it still has an imposing Memorial Hall, a fire station, garage and the Inman Valley General Store.