Its formation was prompted by the high level of indirect taxation as a proportion of the Isle of Man Government's income, the relatively low wages, and the lack of social legislation.

[6] The founders of the party saw that as being unfair to the poorest in society and wanted to increase the reliance on income taxation instead, and to introduce social legislation such as old age pensions.

Alf Teare, founder of the Manx branch of the Workers’ Union and one of the leaders of the strike, was described in 1918 as ‘the most powerful man on the Island.’ It was a remarkable testament to the reversal of fortunes which wartime conditions had produced.

Since its founding, the Manx Labour Party had campaigned every election on a policy of nationalising land, transport and public utilities.

This is part of the Island's manner of politics which has usually been based on coalition and consensus in modern times, with most Tynwald members having some administrative responsibility.

In 2018 Manx Labour was a founding member of the Isle of Man Climate Change Coalition following the IPCC report of that year calling for urgent action.

Joney Faragher was elected as the new leader and Sarah Maltby as the new Chair of the Manx Labour Party on Saturday 27 June 2020.

[19] The party's electoral renaissance began in October 2020 when Devon Watson and Samuel Hamer won both available seats in the Derby Ward by-election for Douglas Borough Council.

[20] The 2021 Local Authority elections were contested by Devon Watson, Samuel Hamer and Peter Washington in Douglas and Fenella Logan in Onchan.