It was formed on 3 November 1945 as the Korean Democratic Party by a mixed group of entrepreneurs, merchants, handicraftsmen, petite bourgeoisie, peasants, and Christians.

The party's founders were motivated by anti-imperialist and anti-feudal aspirations, and aimed to eliminate the legacy of Japanese rule and build a new democratic society.

The party came under greater influence of the ruling government over time, and today is under the effective control of the WPK.

[8] Cho opposed the results of the Moscow Conference in December 1945, in which the foreign ministers of the Soviet Union, the United Kingdom and the United States agreed to establish a joint trusteeship over the formerly Japanese-occupied Korea, which triggered widespread opposition and protests.

[8] The KDP Central Committee's Plenum on 2 January 1946 formally voted against the trusteeship plan, and on 5 January, Cho resigned from his position as chairman of the Provisional People's Committee for the Five Provinces, leading many KDP members to follow his example.

[6] Cho's arrest led to many of the party's leaders moving to Seoul in South Korea, where they set up a new headquarters;[6] the party nominated five candidates for the May 1948 Constitutional Assembly elections in South Korea, winning one seat, taken by Yi Yun-yong.

[8] The KDP held its Second Congress on 13–15 April 1947, where it continued to attack Cho, praised the "liberating mission of the heroic Soviet Army" and adopted a structure closely resembling that of the Workers' Party of North Korea.

[18] Contrary to its usual portrayal in official propaganda, for a brief time in the mid-to-late 1980s, the party's journal featured texts raising criticism of government policies.

It is believed these statements may have been linked to a brief liberalization of North Korea's justice system that occurred around the same time.

[8] Since its neutralization and effective demise by the WPK, the party has been used in North Korean propaganda targeting foreign sympathizers.