The party was formed on 23 February 1999 when Benny Begin, Michael Kleiner and David Re'em broke away from Likud during the fourteenth Knesset.

The breakaway was the result of disagreements with Likud leader Benjamin Netanyahu over the Wye River Memorandum and the Hebron Agreement, which had ceded land to the Palestinians.

[1] Herut participated in the 1999 elections as part of the National Union, a right-wing alliance of itself, Moledet and Tkuma with Begin at its head.

The poster's publication resulted in Attorney General Menachem Mazuz ordering the police to investigate the party for inciting racism.

Committee chairman and Supreme Court Judge Dorit Beinisch asserted that the removed segment from the advertisement clearly made reference to a blatantly racist slogan and retorted that if aired, would most probably hurt the feelings of the Arab population.