Highly pathogenic avian influenza (HPAI) viruses of the H5N1 subtype are a major concern to human and animal health in Indonesia. This study aimed to characterize transmission dynamics of H5N1 over time using novel Bayesian phylogeography methods to identify factors which have influenced the spread of H5N1 in Indonesia. We used publicly available hemagglutinin sequence data sampled between 2003 and 2016 to model ancestral state reconstruction of HPAI H5N1 evolution. We found strong support for H5N1 transmission routes between provinces in Java Island and inter-island transmissions, such as between Nusa Tenggara and Kalimantan Islands, not previously described. The spread is consistent with wild bird flyways and poultry trading routes. H5N1 migration was associated with the regions of high chicken densities and low human development indices. These results can be used to inform more targeted planning of H5N1 control and prevention activities in Indonesia.