Giant Eagle, Inc., a Pittsburgh-based grocer, wants to demolish the century-old church and build a convenience store and gas station in its place.
Indiana plans to spend $75 million in federal grants to demolish 4,000 abandoned properties across the state.
The explosion is the third in a series of four demolitions that will lead to the removal of the entire old Milton-Madison Bridge.
The 10-year nesting site will remain undisturbed during construction, officials say.
A group of emergency response teams went through training on the IU campus Wednesday.