Before the Great Turf Wars, the Inklings and Octarians had 'amicable relations', that was until the rising sea levels caused them to lash out against each other in a power struggle over the remaining land.
The Octarians took victory over the Inklings in their first battles, due to the Inkling's inability to wake up early enough to defend themselves against the Octarian's Great Octoweapons. The Octarians had all but sealed the Inkling's fates when a plug was carelessly pulled out, causing the Great Octoweapons to fail. Without these essential weapons at the Octarian's disposal, they were quickly defeated by the Inklings, which appears to be due to their superior number of tentacles.
After the Octarians were defeated, they were forced to move underground where they connected their territory through a series of kettles. This was later known as Octo Valley.