It was founded on 7 October, 1989 as a post-communist evolution and one of two legal successors of the Hungarian Socialist Workers' Party (MSZMP).

Following the 2010 election, MSZP became the largest opposition party in parliament, a position it held until 2018, when it was overtaken by the former far and now centre-right Jobbik.

The MSZP evolved from the communist Hungarian Socialist Workers' Party (or MSZMP), which ruled Hungary between 1956 and 1989.

One of its leaders, Rezső Nyers, the architect of the New Economic Mechanism in the 1960s and 1970s, was elected as chairman of a four-man collective presidency that replaced the old MSZMP Politburo.

Indeed, many key MSZP politicians were active members or held leadership positions within the MSZMP (like Gyula Horn and László Kovács).

In contrast, issues like church and state and former communists show alignment along the traditional left-right spectrum.

Besides Gyula Horn, the MSZP's most internationally recognized politicians were Ferenc Gyurcsány and László Kovács, a former member of the European Commission, responsible for taxation.

After the successful fees abolishment referendum, MSZP formed the first minority government of Hungary, following the SZDSZ's backing out of the coalition with a deadline of 1 May 2008.

On 21 March 2009 Gyurcsány announced his resignation as Prime Minister due to failure management of the economic crisis.

The Hungarian Socialist Party suffered a heavy defeat in the 2010 election (won by Fidesz with a ⅔ majority), gaining only 19.3% of the votes, and 59 seats in the parliament.

As a result, Gyurcsány, along with nine other members of the parliamentary group, left MSZP and established Democratic Coalition (DK).

Mesterházy was elected candidate for the Prime Minister position, but the Unity alliance failed to win.

In June 2018, Bertalan Tóth was elected president in the MSZP, shortly after the party suffered its worst electoral defeat since 1990.

[27] The party further declined in the 2019 European election, only scoring 6.61% of votes (even in alliance with Dialogue for Hungary) and being overtaken by the Democratic Coalition and Momentum.