The town of Indian Head was incorporated in 1920. It is located between the Potomac River and Mattawoman Creek. The Town of Indian Head occupies land that was once part of the territory of the Algonquin Indians. The origin of the name Indian Head originates from the term "Indian Headlands", as the entire lower end of the peninsula was occupied by Native Americans and was an Indian Reservation.

The name Indian Head first appears in the 1800 Census. The Town's early residents came in 1890 to work at the newly established Naval Proving Ground which provided badly needed employment during the post-Civil War depression.  Later the facility went through a series of name changes to reflect its changing mission.  These included the Naval Powder Factory, Naval Propellant Plant, Naval Ordnance Station, Indian Head Division of the Naval Surface Warfare Center, and Naval Support Facility - Indian Head.  Today, it is part of the Naval Support Activity - South Potomac and is home to a variety of tenants that include the Indian Head Division of Naval Surface Warfare Center, Naval Explosive Ordnance Disposal Technology Division, Joint Interoperability Test Center, and the Marine Corps Chemical, Biological Incident Response Force.  The Base is one of the largest employers in Charles County.