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The induction took place during the 34th Annual National Old Time Country, Bluegrass and Folk Music Festival in Le Mars.
The 70-year-old artist also got up on stage and played some of his classics tunes as well as songs off his new record.
Bailey, who grew up on a farm in Alabama, started playing music when he was 12.
In 1978, he signed with record label RCA and had nine singles that earned the top spot in the charts.
His music contains elements of country, blues, jazz, pop and rock.
"My style is just my style," Bailey said. "I do music the way I like it."
Although Bailey can recall a "lot of good memories" throughout his career, there is one experience that stands out to him in particular.
He played in front of more than 1 million people at a show in Washington D.C.
"The Beach Boys were there, Ringo Starr, and others," Bailey recalled. "It was an overwhelming experience."
Although Wednesday's audience may not have broken the 1 million mark, Bailey was excited about his first time in town nonetheless.
"It makes me feel great (to be here)," he said prior to the concert. "I am excited and very grateful."
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