The Inn at Ellsworth Estate was originally built as a private residence in 1915 for James MacDonald and his Hailey bride, Beulah Lamb. MacDonald's father was the Director of Standard Oil in London and a partner of John D. Rockefeller. The builder was a man named Jack Rutter, who constructed many of the buildings in Hailey, some of which are still standing today, such as the Liberty Theatre, Hailey Hotel, and the Masonic Lodge. MacDonald's house was one of his first major projects in the valley.
The house was purchased by the Fox family as a private residence in the 1930s, and after they departed, it served as a Mormon Church. The Ellsworth Family purchased the house in 1961 and lived there for a number of years. After the Ellsworths departed, the house was purchased by Sonja Tarnay in the 1980s, who restored and remodeled the house to serve as a bed and breakfast inn, which she called The Ellsworth Inn.