After Colin Chapman had watched the Indianapolis 500 race in 1962, he was convinced that his mid engined single-seaters could easily take on the old fashioned American 'roadsters'. Over in Europe the Formula 1 championship had quickly adapted to the mid engine layout pioneered by Cooper and Lotus, which offered superior handling over the traditional front engined racer. There is some logic in the Americans reluctance to change the layout of their racers; sheer speed and durability were the decisive factors on the oval tracks. Nevertheless Chapman further expanded his racing interests and set out to design an 'Indy racer' for 1963. Over the winter Lotus secured a deal with Ford, who would supply a Fairlane derived V8.

The engine was designed to run on pump fuel, rather than the high octane racing fuels used by the competition. This meant less power, but better fuel efficiency. Chapman figured the light weight of the car would more than make up for the power deficit. The Ford engine was installed in a highly modified Lotus 25 chassis, which was increased in size to adopt the big engine. The most striking exterior feature of the Lotus 29 was the off-set suspension, which made it suitable only to oval racing. Although the Lotus 29 was considerably larger than the contemporary Formula 1 racers, it was dwarfed by the big Offenhauser powered specials. After qualifying fifth, Jim Clark led for a number of laps, but bad luck threw the British racer back to second. Clark scored Lotus maiden oval finish a fortnight later in the Milwaukee 200 mile race.