The land in Barr Township of Daviess County on which Montgomery is located was purchased by James Montgomery and Nicholas Kidwell in October 1816. Both the Montogmery and Kidwells were among early Maryland settlers who came west after the American Revolution. Traveling by Boone's Trace, they initially settled in Kentucky, then moved northward in 1812, traveling to Paoli, crossing the White River and Shoals and then to Black Oak Ridge, Montgomery's early name.

The history of Montgomery's St. Peter's Catholic church dates back to St. Peter's Church1820, when a log church was built. In 1841, the Vincennes Bishop gave land at Black Oak Ridge to Fr. Edward Sorin and six Brothers of the Holy Cross. They built onto the original church and began teaching with the goal of starting a college. However, the Bishop opposed the plan, since a college existed in Vincennes. So he offered them land in northern Indiana for the college, and the offer was accepted in the fall of 1842. Fr. Sorin headed north to establish Notre Dame at South Bend.

St. Peter's at Montgomery, the first Holy Cross parochial school in the United States, remained with the Sisters of Providence instructing. The current St. Peter's Church was built in 1869, and it's accompanying school now houses Barr-Reeve's primary students.

Montgomery's current population is 361, and the land first owned by the Montgomerys is now a part of Ruritan Park.