The Dayton Gems began with a bang in the fall of 1964. The lobby of their new arena, Hara Arena, had a natural gas explosion. The damage was minor and the expansion team was assembled from various cast-offs and young players looking for their first break in minor league hockey. The International Hockey League was a single A level bus league at the time consisting of eight to ten midwest teams. Intense rivalries began with the Toledo and Columbus teams.

The Gems, named for the city of Dayton, Ohio being the Gem City of the Midwest, were affiliated with the Boston Bruins for several years. The Bruins provided some of the players and the trainer for the team. In the 1970s, the Gems became an affiliate for the Washington Capitols. A few players were able to make the sizeable jump to NHL teams. Tony White played several seasons as a wing with the Capitols. Mike Dumas was Tony Esposito's back-up in goal for the Chicago Blackhawks for a few years. Dave Forbes was a foward who played on a few NHL teams. Guy Trottier, "the little French-Canadian with the big shot" played for the Michigan Stags of the WHA. Pat Rupp was a goaltender on the 1968 US Olympic hockey team, but declined to sign an NHL contract, wanting to stay in Dayton. In those days the players had off-season jobs such as insurance salesmen and construction workers to supplement their small incomes from playing hockey. The IHL was not considered to be a "professional" league at the time.

The team was improved over the years by their innovative General Manager Edgar "Lefty" McFadden. McFadden had been a pitcher in high school and college baseball in Ohio. He had a shrewd eye for athletic talent and promotion. He picked up players that sat the bench for other teams in the IHL. Lefty and the various coaches of the Gems (Warren Back, Larry Wilson, Jim Anderson and Tom McVie) would turn these players into league all stars. Don Westbrooke, the regular season league scoring champion in 1969-70, was a converted defenseman who was obtained in a trade in 1967. This was how the Gems won three Turner Cups and lost in the finals twice during their fourteen year tenure.

Dayton was the host for several IHL All Star games due to the relatively large attendance that they attracted in their 5600 seat arena. The Gems played exhibition games against the US Olympic team as well as the Oklahoma City Blazers of the Central League. The team had a few games a season televised locally as well as all games broadcast on the premier AM radio station in town. Other teams in the league copied the uniform styling of the Gems. The Dayton Gems were the first adult team in North America to make the wearing of helments mandatory, long before the NHL adopted them.

After winning the Turner Cup two years in a row in 1968-69 and 1969-70, GM McFadden was selected as the minor league executive of the year. He then moved to Washington to assist the Capitols. The Gems struggled on and off the ice for the next few years as attendance decreased from 5000 to 1000 a game. The 1970s downturn in the economy, especially the auto industry, reduced disposable income for the fans. This combined with the increase in hockey violence to hurt the attendance. The Gems recovered to win their final Turner Cup in 1976. The team suspended operations for a year then came back for a final season before folding. Their red, white and blue uniforms with the crest of a hockey player superimposed over a diamond to be seen no more, except for exhibitions at the Hockey Hall of Fame in Toronto.