Wordorigins.org

Indiana is simply a Latinized form of Indian, meaning roughly “land of the Indians.”

The name appears as early as 1768 and in the early years applied to a number of western regions of the North American continent. The Indiana Territory was formally organized in 1800 and this particular territory is what eventually became the state in 1816.

(Sources: Illustrated Dictionary of Place Names; Webster’s Third New International Dictionary)