Manny Arop tallied 13 points for Indiana State (2-1), which returns four starters from last year's team that beat Miami-Florida, Creighton and eventual Final Four participant Wichita State. Jake Odum netted 10 points with seven rebounds and five assists.
Notre Dame (2-1) opened up the game leading 5-2, but the Sycamores went on a 23-6 run capped by a Dawon Cummings 3-pointer that pushed Indiana State's lead to 25-11 with just under eight minutes remaining in the first half.
Eric Atkins scored 18 points with five assists for the Irish, who trailed 40-30 at halftime. Jerian Grant and Pat Connaughton chipped in 17 and 16 points, respectively.
This was the first home loss for Notre Dame in November under head coach Mike Brey, who is in his 14th season at South Bend. The Irish were previously 48-0 in such games entering Sunday.
The Irish came out in the second stanza like a team ranked in the Top-25, going on a 15-4 run in the first five minutes to take their first lead since the opening stages.
Connaughton hit a three just over a minute into the second half and Atkins followed with a three-point play to cut the deficit to 42-36.
Austin Burgett hit a three-point play of his own to give the Irish a 45-44 lead, but they proceeded to go scoreless over the next four minutes.
Indiana State responded in the hostile environment by going on a 10-0 run to retake the lead at 54-45.
Khristian Smith hit back-to-back jumpers and Devonte Brown capped the run with a jumper, forcing Brey to burn a timeout with just over 11 minutes left in the game.
Notre Dame couldn't make a stop down the stretch as Indiana State answered every Irish bucket with one of its own. The Irish got as close as eight points, but the Sycamores led by double-digits for a majority of the second half.
Arop made a pair of free throws with under two minutes left to give Indiana State its largest lead of the day at 75-60, and the Sycamores stayed in front the rest of the way to pull off the upset against their in-state opponent.
Indiana State shot 94.1 percent from the free throw line, hitting 16-of-17 attempts ... Each team had 37 rebounds, 16 turnovers and eight steals ... Notre Dame continues its six-game homestand to open the season with a game against Santa Clara on Friday ... Indiana State returns home for a matchup against Truman State on Friday.