Mexico is one of the oldest communities in Miami County, having been laid out by John R. and Simeon Wilkinson in 1834. During that same year, the first sawmill in the county began operation just outside of Mexico, and the first corn mill was attached to it in 1836 by B. L. Daniels.

Mexico was built by an Indian trail that ran along the west bank of the Eel River. This trail was the first road in Miami County, and was later known as the Michigan Road.

Sitting along the Michigan Road was the River House Inn, owned by the parents of Indiana poet Dulciana Minerva Mason, which was at the time the only stopping point between Indianapolis and Michigan City.