The City of Sidney, named after Sir Philip Sidney, a well-known poet and member of British Parliament, was originally a 70-acre parcel of land located along the west side of the Great Miami River. This land was donated by Charles Starrett to be used as the site of a new town which was to become the county seat of Shelby County. The area around Sidney was once the richly-forested hunting ground of the Shawnee and Miami Indian nations. This fertile area was developed as agricultural lands over time

The construction of the Miami-Erie Canal between 1825 and 1837 connected Sidney in a north/south direction with the major trade centers in Ohio. In addition to opening the first significant "outside" trade for Sidney, the construction of the canal also attracted an influx of settlers to the area.