Shelby is a city in Pottawattamie and Shelby counties in the U.S. state of Iowa. The population was 727 at the time of the 2020 census. Shelb…Shelby is a city in Pottawattamie and Shelby counties in the U.S. state of Iowa. The population was 727 at the time of the 2020 census. Shelby started in the late 1860s, following the construction of the railroad through the territory.