While initially supportive of Canadian Confederation, Coles and the Liberals soured on the project, and it was not until 1873 that the island joined Canada as a means of relieving the PEI government's severe debts.

The early party supported the abolition of school fees, and a resolution to the "Land Question" that divided the province.

The Liberals have also traditionally enjoyed the support of the province's small Acadian population concentrated in Prince County at the west end of the island.

In the past forty years, the most significant figures in the party have been Alexander B. Campbell and, later, Joe Ghiz.

Under Ghiz in the 1980s, the Liberals opposed free trade between Canada and the United States, and the federal Tory government's decision to close a military base on the island.

After three and a half years, Callbeck resigned and was succeeded by Keith Milligan, under whom the Liberals were defeated in the 1996 election, falling to 8 seats.

Ghiz resigned in 2015 and was succeeded as party leader and premier by Wade MacLauchlan, who led the Liberals to a third victory in 2015.