Founded in 1919, Carpenter produced its first bus in 1923. Carpenter's post-World War II success would lead it to become one of the "Big Six" major manufacturers of school buses in North America. After years of declining market share, Carpenter was closed in 2001 by its parent company, Spartan Motors.

Carpenter was founded in Mitchell, Indiana in 1919 by Ralph H. Carpenter, a blacksmith by trade. He began his career building hauling wagons for two cement factories located near his southern Indiana hometown of Bloomington. As his business grew, he began to expand into building horse-drawn "kid hacks" with wooden benches to transport children to school. As wagons became obsolete, he adapted the wagon bodies for automobiles.

Carpenter's first true school bus was built in 1923. The first stop arms used on these buses were in the shape of a clenched fist with the index finger painted red. A combination of steel and wood replaced all-wood construction, and in 1935, a change to all-steel construction was made.

The Smithsonian Institution's National Museum of American History in Washington, DC has a thirty-six passenger school bus built by Carpenter Body Works in 1936 on a chassis made by Dodge in 1939. The bus carried students to the grade school in Martinsburg, Indiana from 1940–1946, and was owned and driven by Russell Bishop during that period. It was later used as a traveling grocery store until 1962.

The bus has a streamlined steel body painted double-deep or "Omaha" orange with black trim. It was restored by Carpenter in the early 1980s under the supervision of Ollie Eager, who was Carpenter's plant manager in 1936, and John Foddrill, who worked in the Carpenter plant in 1936. The bus has replacement seats that do not match the originals exactly. The originals were black upholstery.

On March 12, 1956, a fire broke out inside Carpenter's Mitchell manufacturing plant. The plant was mostly destroyed. With the help of factory workers, the factory was rebuilt and expanded in just 89 days. During the reconstruction, some workers worked without pay until later compensated.

Throughout the next twenty years, the business prospered and Carpenter became one of the "big six" major school bus body builders in the United States, competing directly against Blue Bird, Superior, Thomas, Ward, and Wayne.

In the early 1980s, there was a downturn in U.S. public school enrollments as the baby boom generation became older than school-age. U.S. school bus sales declined, a situation compounded by over-capacity in the bus body industry. The company unsuccessfully attempted to diversify into the small transit bus market. By mid-decade, Carpenter had entered into Chapter 11 bankruptcy.

Salvation came to Mitchell in the form of an Indianapolis-based industrialist, Dr. Beurt SerVaas, who led a refinancing and revitalization program to attempt to restore the company's role in the national school bus market. The company's unionized workers made major concessions, and production of school buses continued. During the 1980s, Carpenter would also make major updates to its product lineup. The Corsair transit-style school bus, in production since the late 1960s, was retired and replaced with the Cavalier (which later was replaced by the Counselor). The Classic, Carpenter's conventional-style school bus, underwent body revisions in 1984 and 1986. Although the Cadet Type B was one of the first small school buses (introduced in 1969), Carpenter was among the last of the major manufacturers to bring a Type A school bus (the Classmate) to market in the mid-1980s.

In May 1991, Carpenter purchased the tooling and product rights of Crown Coach, a California-based manufacturer that had closed its doors two months prior. Carpenter's original intent was to restart production of the Crown Supercoach Series II under the Carpenter name, but the complexity of its design proved too expensive for mass production. However, a few of the Supercoach Series II's styling elements would influence the final design of the replacement for the rear-engine Corsair: the Carpenter Coach RE.