The half-dollar-sized large cent was struck from 1793 to 1857. That coin was intended to contain close to a cent's worth of copper, as people expected coins to contain close to their face values in metal. Nevertheless, because of the constitutional clause making only gold and silver legal tender, the government would not accept copper cents for taxes or other payments. By the early 1850s, fluctuations in the price of copper led the Mint of the United States to seek alternatives, including reducing the size of the cent and experimenting with compositions other than pure copper. The result was the Flying Eagle cent, the same diameter as the later Lincoln cent but somewhat thicker and heavier, composed of 88% copper and 12% nickel. The Flying Eagle cent was struck in limited numbers as a pattern coin in 1856, then for circulation in 1857 and 1858.

The Flying Eagle cent was issued in exchange for worn Spanish colonial silver coins, which until then had circulated widely in the United States. These "small cents" were also issued in exchange for the copper coins they had replaced. By 1858, Mint authorities found the piece unsatisfactory in production. The high points on both sides of the coin (the eagle's head and the wreath) opposed each other, and it was difficult to get the design to be brought out fully in the tough copper-nickel alloy. Mint Engraver James B. Longacre, designer of the Flying Eagle cent, was instructed to develop alternative designs. He produced one, showing a slimmer eagle, which would not clash as much with the reverse wreath. Although that would have cured the production problem, the design was not liked. Mint Director James Ross Snowden suggested a head of Columbus as an obverse design, but Longacre felt the public would not approve of a historic figure on an American coin.

In 1858, the Mint tested new designs for the cent. Between 60 and 100 sets of twelve pattern coins were struck, consisting of the standard Flying Eagle obverse, a "scrawny eagle" pattern, and the Indian Head design, mated with four different wreaths for the reverse. Snowden made his choice of what design would be struck in 1859 from those patterns, and the sets were also sold to collectors. The Indian Head design was apparently prepared by April, as on the twelfth of that month, a Mr. Howard wrote to Snowden that "I have learned that a new pattern piece for the cent has been struck off at the Mint [with] a head resembling that of the five dollar piece and on the reverse a shield at the top of the olive and oak wreath", and asking to purchase a specimen. Other numismatists also sought pieces: R. Coulton Davis, a Philadelphia druggist with ties to the Mint, wrote to Snowden in June informing him of a favorable story in a Boston newspaper, and Augustus B. Sage wrote to the Mint Director the same month, asking for a specimen for himself, and one for the newly founded American Numismatic Society.

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Longacre advocated his Indian Head design in an August 21, 1858, letter to Snowden:

From the copper shores of Lake Superior, to the silver mountains of Potosi from the Ojibwa to the Araucanian, the feathered tiara is as characteristic of the primitive races of our hemisphere, as the turban is of the Asiatic. Nor is there anything in its decorative character, repulsive to the association of Liberty ... It is more appropriate than the Phrygian cap, the emblem rather of the emancipated slave, than of the independent freeman, of those who are able to say "we were never in bondage to any man". I regard then this emblem of America as a proper and well defined portion of our national inheritance; and having now the opportunity of consecrating it as a memorial of Liberty, 'our Liberty', American Liberty; why not use it? One more graceful can scarcely be devised. We have only to determine that it shall be appropriate, and all the world outside of us cannot wrest it from us.

By numismatic legend, the facial features of the goddess Liberty on the obverse of the Indian Head cent were based on the features of Longacre's daughter Sarah; the tale runs that she was at the mint one day when she tried on the headdress of one of a number of Native Americans who were visiting, and her father sketched her. However, Sarah Longacre was 30 years old and married in 1858, not 12 as in the tale, and Longacre himself stated that the face was based on a statue of Crouching Venus in Philadelphia on loan from the Vatican. He did often sketch his elder daughter, and there are resemblances between the depictions of Sarah and the various representations of Liberty on his coins of the 1850s. These tales were apparently extant at the time, as Snowden, writing to Treasury Secretary Howell Cobb in November 1858, denied that the coin was based "on any human features in the Longacre family". Lee F. McKenzie, in his 1991 article on Longacre, notes that any artist can be influenced by many things, but calls the story "essentially false".

Regardless of who posed for Longacre, the facial features of the "Indian" are essentially Caucasian, meaning that a Caucasian woman wears the headdress of a Native American man. Longacre had, in 1854, designed the three-dollar piece with a female with similar features (also supposedly based on the museum sculpture) but a more fanciful headdress, and adapted that design for the gold dollar. Officials were aware of this artistic license at the time of issue; Snowden, in his November 1858 letter to Cobb, characterizes the two earlier coins as "the artists at the Mint evidently not realizing the absurd incongruity of placing this most masculine attribute of the warrior brave on the head of a woman". Longacre would not be the last to juxtapo…

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Congress passed legislation in 1890 allowing the Mint to alter designs that had been in use for 25 years without the need for legislative authorization. In 1904, President Theodore Roosevelt wrote to his Secretary of the Treasury, Leslie Mortier Shaw, complaining that U.S. coinage lacked artistic merit, and enquiring if it would be possible to engage a private artist, such as sculptor Augustus Saint-Gaudens, to prepare new coin designs. At Roosevelt's instructions, the Mint hired Saint-Gaudens to redesign the cent and the four gold pieces: the double eagle ($20), eagle ($10), half eagle ($5), and quarter eagle ($2.50). As the designs of those pieces had remained the same for 25 years, they could be changed without an act of Congress, as could the Indian Head cent.

Saint-Gaudens originally conceived a flying eagle design for the cent, but at Roosevelt's request, developed it for the $20 piece after learning that under the 1873 act, an eagle could not appear on the cent. Writer and friend Witter Bynner recalled that in January 1907, Saint-Gaudens was seriously ill with cancer, and was carried to his studio for ten minutes a day to critique the work of his assistants on current projects, including the cent. Saint-Gaudens died on August 3, 1907, without having submitted another design for the cent.

With the redesign of the four gold denominations completed by 1908, Roosevelt turned his attention to the cent. The centenary of the birth of assassinated president Abraham Lincoln would occur in February 1909, and large numbers of privately manufactured souvenirs were already being issued. Many citizens had written to the Treasury Department, proposing a Lincoln coin, and Roosevelt was interested in honoring his fellow Republican. This was a break with previous American numismatic tradition; before the Lincoln cent, no regularly circulating U.S. coin had featured an actual person (as opposed to idealized personifications, as of "liberty").

In late 1908, Roosevelt sat for sculptor Victor David Brenner, who was designing a medal for the Panama Canal Commission. It is uncertain how Brenner was selected to design the coin, but in January 1909, Mint Director Frank A. Leach hired him to design a Lincoln cent. This went into circulation later in 1909, putting an end to the Indian Head cent series.