Transportation agencies continuously and consistently work to improve the processes and systems for mitigating the impacts of roadway incidents. Such efforts include utilizing emerging technologies to reduce the detection and response time to roadway incidents. Vehicle-to-infrastructure (V2I) communication is an emerging transportation technology that enables communication between a vehicle and the infrastructure. This paper proposes an algorithm that utilizes V2I probe data to automatically detect roadway incidents. A simulation testbed was developed for a segment of Interstate 64 in St. Louis, Missouri to evaluate the performance of the V2I-based automatic incident detection algorithm. The proposed algorithm was assessed during peak and off-peak periods with various incident durations, under several market penetration rates for V2I technology, and with different spatial resolutions for incident detection. The performance of the proposed algorithm was assessed on the basis of the detection rate, time to detect, detection accuracy, and false alarm rate. The performance measures obtained for the V2I-based automatic incident detection algorithm were compared with California #7 algorithm performance measures. The California #7 algorithm is a traditional automatic incident detection algorithm that utilizes traffic sensors data, such as inductive loop detectors, to identify roadway events. The California #7 algorithm was implemented in the Interstate 64 simulation testbed. The case study results indicated that the proposed V2I-based algorithm outperformed the California #7 algorithm. The detection rate for the proposed V2I-based incident detection algorithm was 100% in market penetrations of 50%, 80%, and 100%. However, the California #7 algorithm’s detection rate was 71%.