Christopher Ferrell told police he fatally shot Mills in self-defense in the pre-dawn hours of Nov. 23 after the two got into an argument over the musician smoking a cigarette in a no-smoking area of Ferrell's Pit and Barrel.
Mills was rushed to the hospital and died that evening.
In a news release, the Metropolitan Nashville Police Department said an investigation concluded that the evidence did not support Ferrell's claim of self-defense. Ferrell was indicted by the grand jury Friday morning.
Ferrell's attorney, David Raybin, said Ferrell turned himself in to police on Friday afternoon. His bond was set at $300,000.
"As to the charge, we deny that Mr. Ferrell is guilty of any degree of homicide, much less murder," Raybin said. "We will vigorously contest the charges."
A spokeswoman for Mills' family, Beverly Keel, said the family had no comment on the indictment.
Michael Scott, who was among a group of friends with Mills the night of the shooting, told WSMV-TV they had gone to a George Jones tribute concert and then a couple of bars before ending up at the Pit and Barrel. The shooting took place shortly before 5 a.m.
Mills' memorial service will be held at the Arab High School auditorium in his hometown of Arab, Ala., on Sunday.
According to biographical information in his obituary and memorial service announcement, Mills toured for more than 15 years as the lead singer of the Wayne Mills Band. Country music stars Jamey Johnson and Blake Shelton, as well as American Idol winner Taylor Hicks, all opened for the band in their early careers.
Mills graduated from the University of Alabama with an education degree, and also played football for the school.
He moved to Nashville in 2003.