Rafi was founded on 14 July 1965 when David Ben-Gurion led a breakaway of eight MKs from Mapai, the ruling party, taking with him Moshe Dayan, Shimon Peres, Chaim Herzog, and Teddy Kollek, among others.

Although Ben-Gurion hoped to displace the Labour Alignment as the leading left-wing party in the Knesset, Rafi won only 10 seats.

In early 1967, Rafi and Menachem Begin's Gahal party discussed the idea of forming a center-right coalition to challenge Mapai.

However, Ben-Gurion could not reconcile himself to the merger with his foes, and broke away from the party to sit as an independent MK for the rest of the Knesset session.

However, after Ben-Gurion retired from politics in 1970 it fell apart, eventually merging with the Free Centre and Gahal to form Likud.