During the perestroika era, the Estonian Social Democratic Party (Eesti Sotsiaaldemokraatlik Partei, ESDP) was formed as Estonia's social-democratic movements merged in 1990.

The seemingly unlikely decision to fuse took place on 29 May 1999, with some foreign commentators drawing parallels with 'right-wing socialists'.

It was the most successful party in the 2004 European Parliamentary Election, obtaining 36.8% of the national vote (most of which went to their leading candidate Toomas Hendrik Ilves) and returning three MEPs.

The party was in opposition from 2002 on, but they participated talks for a common alternative presidential candidate to Arnold Rüütel, SDE's Toomas Hendrik Ilves was elected on 23 September 2006 as the next president of Estonia (apart from the Social Democrats, he was supported by the Reform Party of Estonia, Pro Patria Union and Res Publica deputies).

Comparing to 2003. elections to the local government council in Tallinn SDE and People's Union gained seats.

Independent member of current Riigikogu Liina Tõnisson ran as a candidate in their list.

In April 2007, the Social Democrats joined the coalition government led by the Estonian Reform Party.

[15] On 7 November 2016, the Social Democratic Party and IRL announced that they were asking Prime Minister Taavi Rõivas to resign and were planning on negotiating a new majority government.

[18] This cabinet governed until 29 April 2019, when it was brought does by a vote of no confidence when the SDE and IRL sided with the opposition parties.

Following the election on 7 March, Prime Minister Kallas invited the SDE and Estonia 200 for preliminary talks aimed at forming a new coalition government.

[27] One year on from the 2023 Estonian parliamentary election, the Social Democrats remained the only party in the government coalition to avoid losing support in polling.

The party returned to government in Kaja Kallas' second cabinet on 18 July 2022 in a coalition with Reform and Isamaa.