Inverse condemnation is a legal concept and cause of action used by property owners when a governmental entity takes an action which damages or decreases the value of private property without obtaining ownership of the property through the use of eminent domain. Thus, unlike the typical eminent domain case, the property owner is the plaintiff and not the defendant.

In the United States of America, inverse condemnation actions are filed against the federal government pursuant to the Takings Clause of the 5th Amendment to the United States Constitution, and against state governments under that clause or similar clauses found in most state constitutions.

Since the early days of the United States, inverse condemnation claims have been brought under the Takings Clause which states that private property shall not "be taken without just compensation". It is generally accepted by legal scholars that the clause "was originally understood to apply only to physical seizures of property" and was not interpreted as expansively as it is today.

The doctrine was first applied to regulations of property after the U.S. Supreme Court's seminal decision in Pennsylvania Coal Co. v. Mahon. In Mahon, the Court held that a Pennsylvania law which "barred coal mining if it would cause the land at the surface to subside" was unconstitutional. In Mahon, Justice Oliver Wendell Holmes, writing for the court, "established the proposition that 'while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.'"

For a number of decades, Mahon was an outlier case. However, jurists began to embrace the regulatory takings doctrine more after the emergence of the modern property rights movement in the 1970s, particularly the formation of the Pacific Legal Foundation in 1971, and the publication in 1985 of Richard A. Epstein's book, Takings.

In particular, the doctrine was expanded by three Supreme Court cases in the 1980s. In those cases, the Court "reaffirmed" the diminution in value test originating in Mahon, created the unconstitutional conditions doctrine for exactions, and "held an interim regulation could be considered a temporary taking".

In 1991, the Court further expanded the doctrine with its seminal decision in Lucas v. South Carolina Coastal Council, where it held that a governmental regulation that deprived a land of all value constituted a taking. Thus, during the late twentieth century, the discussion of regulatory takings predominated the discussion of inverse condemnation in legal academia.

In 2013, the Supreme Court in Horne v. Department of Agriculture held that the Takings Clause applies to personal property as well as real property.