In 1781, Isaac Shelby was elected to the North Carolina Legislature. In 1782, Shelby moved to the territory of Kentucky. In April 1783 at Boonesboro, Kentucky, he married Susannah Hart, with whom he had eleven children, and settled near Stanford in Lincoln County, Kentucky where he worked as county surveyor and high sheriff. He began building a stone house which he named Traveller's Rest. Also in 1783, Shelby became one of the first trustees of the Transylvania Seminary. In 1786, he completed Traveller's Rest.
Shelby was a member of three Kentucky conventions in preparation of statehood in 1787, 1788 and 1789. In January 1791, Shelby joined four others on a local Board of War that had been created by Congress for the defense of the frontier of the District of Kentucky. In April 1792, he was a member of the convention which framed Kentucky's first constitution. In May 1792, he was elected the first governor of Kentucky and resigned his position as High Sheriff of Lincoln County.
Shelby took office on June 4, 1792 and served until 1796 and was not reelected because the state constitution barred anyone from serving consecutive terms as governor. He served as a presidential elector in 1797, 1801 and 1805. In 1812 when war with England loomed, Shelby was again elected governor. Now a major general of militia, he personally led 4,000 Kentucky volunteers under General Harrison to Detriot and fought couragously at the Battle of the Thames on October 5, 1813. He was later awarded a gold medal by Congress for his efforts.
In 1817 Shelby declined President James Monroe's offer of the position of Secretary of War because of his age. In 1818, he was commissioned with General Andrew Jackson to hold a treaty with the Chickasaw Indians for the purchase of lands west of the Tennessee River, which is now known as the Jackson Purchase. In 1819, Shelby became the chairman of the first board of trustees of Centre College. Shelby was partially paralyzed in 1820 by a stroke. On July 18, 1826, another stroke killed Shelby while he was at his home Traveller's Rest.