The Nationalist Party was founded on 29 December 1926 by President of the Republic Hernando Siles Reyes and a group of young intellectuals, such as Augusto Céspedes, Carlos Montenegro, and Enrique Baldivieso.
He was Bautista Saavedra's hand-picked successor, but once in power he broke from him and formed his own faction which became Nationalist Party.
Despite all this, the Siles government soon ran into economic and political difficulties associated with the far-reaching effects of the Great Depression of 1929.
In the midst of economic crisis and social unrest, Siles in 1929 declared his intention to remain in office with the Nationalist's support.
Some of the ex-Nationalists figured among the founders of the United Socialist Party (1936); others were absorbed into the Revolutionary Nationalist Movement (1941).