The NU was founded in 1926 by the ulema and merchants to defend both traditionalist Islamic practices (in accordance with Shafi'i school) and its members' economic interests.

[4] By contrast, the second largest Islamic organization in Indonesia, the Muhammadiyah, is considered "reformist" as it takes a more literal interpretation of the Qur'an and Sunnah.

[7] Nahdlatul Ulama follows the Ashʿari and Maturidi schools, taking the middle path between aqli (rationalist) and naqli (scripturalist) tendencies.

[8] It has been described by Western media as a progressive, liberal, and pluralistic Islamic movement,[9][10] but is a diverse organization with large conservative factions, as well.

[15]: 233–236 NAHDLATUL ULAMA RESOLUTIONto all members in Java and Madura Islands In the Name of God, the Most Gracious and Merciful: The Regional Leaders and Representatives of Nahdlatul Ulama, assembled in Surabaya, East Java, in general session of the Java-Madura Conference of the aformentioned on 21-22 October 1945, hereby declare that: Given that the testimonies and speeches given from representatives from Java and Madura revealed the huge desire of the Muslim Ummah and Ulama of these regions and in the areas of the aforementioned to defend and uphold both religion and the sovereignty of the newly independent Republic of Indonesia, declared on the 17th of August of this year, against foreign aggression, during the duration of this Conference, considering that the defense of Republic of Indonesia according to the laws of the Islamic Religion as thus a obligation for every Muslim in accordance with Islamic doctrine, and that Muslims constitute the majority of the citizenry of the young Republic, and considering the following realities faced by the Muslim community: Whereas, That the Dutch (NICA) and the Japanese who came and were here in the lands of the Republic carried out many crimes and atrocities which disturbed the peace, Whereas, That everything they did was done with the intention of violating the sovereignty of the independent Republic of Indonesia and the freedom of religion, and wanting to restore their former colonial possessions, there have been battles that have sacrificed many lives in many places of the republic, Whereas, these battles were mostly carried out by members of the Muslim community who felt obliged according to their religious laws to defend the independence of their country and religious freedom, And whereas, in dealing with all these incidents, in accordance with our response, we have not received concrete orders and demands from the Government of the Republic of Indonesia on that matter.

First, For the NU to urgently request the Government of the Republic of Indonesia to determine a real and commensurate attitude and action towards efforts, especially towards the Dutch and their allies and supporters at home and overseas, that will endanger religious freedom and the independence of the Indonesian nation, and second, for the NU to continue the "sabilillah" struggle for the establishment of the independent Republic of Indonesia and Islam.

The NU leadership at the time had no political skills, and was awarded few influential cabinet positions, with the exception of chairman Wahid Hasyim, who was appointed religious affairs minister.

In the ensuing cabinet crisis, the NU made a series of demands, including the retention of Hasyim, and threatened to leave Masyumi.

Three months later it withdrew all its members from Masyumi councils, and on 30 August it established the Indonesian League of Muslims, comprising the NU, PSSI and a number of smaller organizations.

In the first Ali Sastroamidjojo Cabinet, the NU held three seats, with Zainul Arifin appointed second deputy prime minister.

Three years later, it also argued against Sukarno's "conception" that would eventually lead to the establishment of guided democracy, as this would mean PKI members sitting in the cabinet.

However, the leadership of NU saw the pro-poor Communist Party of Indonesia, which was close to Sukarno, as an obstacle to its ambitions, and competed with it to win support from the poor.

In 1965, the group took sides with the General Suharto-led army and was heavily involved in the mass killings of Indonesian communists.

[20] In 1984, Abdurrahman Wahid, the grandson of NU founder Hasyim Asy'ari, inherited the leadership from his father, and was later elected President of Indonesia in 1999.

Suharto did not approve of the NU straying beyond purely religious activities, and the fact the bank was owned by a Christian ethnic-Chinese family led to controversy.

Gus Dur also incurred the disapproval of the regime by holding a mass rally at a Jakarta stadium three months before the 1992 legislative elections, ostensibly to express support for Pancasila.

[14]: 188–193 This resulted in Gus Dur being invited to meet Lt. Col. Prabowo Subianto, Suharto's son-in-law at Jakarta Military Headquarters.

[14]: 188–193 During the fall of Suharto, Nahdlatul Ulama members and Islamic clerics were killed by rioters in Banyuwangi in East Java when a witchhunt against alleged sorcerers spiralled out of control.

[21][22] Following the fall of Suharto and his replacement by Vice-president B. J. Habibie, in July 1998 Gus Dur announced the establishment of the National Awakening Party (Indonesian: Partai Kebangkitan Bangsa, PKB).

On 10 November, Gus Dur met with other pro-reform figures Amien Rais, Megawati Sukarnoputri and Sultan Hamengkubuwono.

In the ensuing session of the People's Consultative Assembly, Gus Dur was elected President of Indonesia, defeating Megawati by 373 votes to 313.

The PKB subsequently split into two warring factions, one led by Gus Dur's daughter, Yenny Wahid.

Alongside NU theologians, the group built a prevention center in Indonesia to train Arabic-speaking students to combat jihadist rhetoric.

[9][10] On the other hand, Nahdlatul Ulama leaders gave a fatwa in favor of female genital mutilation (FGM).