Itō Nagazane, the founder of the domain, who was a descendant of Itō Sukechika, a late Heian period warlord from Izu Province. He served Toyotomi Hideyoshi and Toyotomi Hideyori, and remained a loyal vassal of the Toyotomi clan until the Siege of Osaka. However, before the 1600 Battle of Sekigahara, he is said to have reported to Tokugawa Ieyasu that Ishida Mitsunari had raised an army against him, and for this reason Ieyasu pardoned Itō Nagazane and his son after the fall of Osaka and end of the Toyotomi. In 1615, he was awarded 10,343 koku scattered across several provinces. He constructed a jin'ya in southern Bitchū Province, and became a daimyō. His descendants ruled the domain until the abolition of the han system in 1871.
A notable event in the history of the domain was the Shinpon Gimin Sōdō (新本義民騒動) of 1718. During the tenure of the 5th daimyō, Itō Nagahiro, the domain "nationalized" Mount Ohira and Mount Haruyama in what is now part of Sōja, Okayama. Historically, local villagers had been permitted to gather lumber for building and firewood on these mountains, but the domain forbid entry and attempted to make a monopoly on wood. Four village headmen travelled to Edo to make a direct appeal to the daimyō. As a result, the monopoly was cancelled and the villagers had their traditional rights restored. However, as was the custom of the time, the four headmen were executed for lèse-majesté, their property forfeited, and their families expelled from the domain. A large monument now commemorates the event.
Okada Domain became Okada Prefecture, and was incorporated into Okayama Prefecture via Fukatsu Prefecture and Oda Prefecture. The Itō clan was later granted the title of viscount under the kazoku peerage system.
