It was founded by prominent Filipino politicians such as, Pedro Paterno, Benito Legarda and Felipe Buencamino, among others.
After the cessation of hostilities in the Philippine–American War (then known as the "Philippine Insurrection"), political parties were allowed to be formed for the first time.
In the establishment of the Philippine Assembly, delegates such as Pedro Paterno, that pushed for Philippine statehood within the United States, formed the Partido Federalista the party was favored by the American insular government, which appointed delegates in the assembly.
The Federalists elected Trinidad Pardo de Tavera as party president and dominated Manila politics.
The Federalistas controlled the Philippine Assembly until 1905 due to internal divisions and the later rise of the Nacionalista Party.