The origins of liberalism in Italy are with the Historical Right, a parliamentary group formed by Camillo Benso di Cavour in the Parliament of the Kingdom of Sardinia, following the 1848 revolution.

The Right was opposed by its more progressive counterpart, the Historical Left, which overthrew Marco Minghetti's government during the so-called "parliamentary revolution" of 1876, which brought Agostino Depretis to become Prime Minister.

This phenomenon, known in Italian as trasformismo (roughly translatable in English as "transformism" — in a satirical newspaper, the PM was depicted as a chameleon), effectively removed political differences in Parliament, which was dominated by an undistinguished liberal bloc with a landslide majority until World War I.

Through the Christian-democratic PPI, Catholics, who were long inactive due to the trauma of the capture of Rome and the struggles between the Holy See and the Italian state, started to be involved in politics, in opposition to both the PSI and the liberal establishment, which had governed the country for virtually sixty years.

The PLI was re-established in 1943 by Benedetto Croce, a prominent intellectual and senator, whose international recognition and parliamentary membership allowed him to remain a free man during the Fascist regime, despite being an anti-fascist himself, and joined the National Liberation Committee.

In its first years, the PLI was home to very different ideological factions and, for instance, it was successively led by Leone Cattani, a representative of the internal left, and then by Roberto Lucifero, a monarchist-conservative.

The new secretary opened to the Socialists, hoping to put in action a sort of "lib–lab" cooperation, similar to the Lib–Lab pact experimented in the United Kingdom from 1977 to 1979 between the Labour Party and the Liberals.

Francesco De Lorenzo, the Liberal Minister of Health, was one of the most loathed politicians in Italy for his corruption, that involved stealing funds from the sick and allowing commercialisation of medicines based on bribes.

The party was disbanded on 6 February 1994 and at least four heirs tried to take its legacy: In a few years after 1994, most Liberals migrated to FI, while others joined the centre-left coalition, especially Democracy is Freedom – The Daisy (DL).

Indeed, as the party was at times the bulwark of secular conservatism and monarchism, it has been variously described as classical-liberal,[11][12] conservative-liberal,[13] liberist[8][11][14] (meaning economically liberal and/or right-libertarian), liberal-conservative,[15][16] and conservative.

The Liberals never gained large support after World War II as they were not able to become a mass party and were replaced by Christian Democracy (DC) as the dominant political force.

The PLI suffered a decline in the 1970s and settled around 2–3% in the 1980s, when its strongholds were reduced to Piedmont, especially the provinces of Turin and Cuneo, and, to a minor extent, western Lombardy, Liguria and Sicily.