Oldfields was established as part of the Town of Woodstock, a tract of land purchased and developed by Hugh McKennan Landon and Linnaes C. Boyd around 1910 as a suburban neighborhood north of Indianapolis. The area was adjacent to the 555-acre (225 ha) Crown Hill Cemetery and the White River, and included residential lots, a reservoir, and a country club. Landon reserved 26 acres (11 ha), or about half of the land, for the construction of Oldfields, which was completed around 1913.
In 1932, in the midst of the Great Depression, Josiah K. Lilly Jr. purchased the estate. In spite of the economic times, Lilly undertook a number of renovation and expansion projects on the property, including an extension to the south for a new library, renovation of the stair hall and front entrance, and the addition of a vestibule that aligned the entrance with the allée at the front of the property.
In the 1950s, Lilly redecorated several rooms in keeping with the tastes of the time. Bookshelves were removed and walls repainted in order to make room for an expanding portrait collection. Additionally, muralist Douglas Riseborough was employed to update the stair hall and the loggia with murals depicting the surrounding grounds and gardens. While most of these renovations were changed in subsequent decades, the mural illustrating views of the allée can still be seen in the loggia.
In 1967, following the deaths of Lilly and his wife, the Lilly children, Ruth Lilly and J.K. Lilly III, gave the estate to the Art Association of Indianapolis to serve as the new art museum. Called the "Lilly Pavilion of Decorative Arts", the house served as an exhibit space at the time that the association changed its name to the Indianapolis Museum of Art in 1969. In the years that followed, the exhibits focused more on decorative arts and less on the historic aspects of the home and garden. Beginning in the 1980s and 1990s, planning began to restore Oldfields to its former condition. In 2002 the historic home reopened to the public, and in 2003 it was designated as a national historic landmark. The property is considered a historic district and includes 10 buildings and 28 other contributing resources.