Within a short time, however, the few independent-minded members from the SPD side of the merger had been pushed out, and the SED became a full-fledged Communist party–essentially the KPD under a new name.

However, it was prevented from participating in the elections from 1954 and onwards under accusations of "espionage" and "diversion" by DDR and SED authorities; it suffered increasing harassment and was eventually closed in 1981.

Early in 1989, the Protestant theologians Markus Meckel and Martin Gutzeit took the initiative to revive a Social Democratic Party in the GDR.

The appeal was signed by Meckel, Gutzeit, director and human rights advocate Ibrahim Böhme and theologian Arndt Noack.

From 7 December 1989, two representatives of the party participated in the Round Table talks between Prime Minister Hans Modrow, who had become the de facto leader of East Germany after the SED surrendered its monopoly of power a week earlier, and various opposition groups.

The talks resulted in representatives of the opposition groups joining Modrow's cabinet as ministers without portfolio until free elections to the People's Chamber could be held.

The SPD initially supported de Maizière's policy of speedy reunification with West Germany, but left the cabinet on 20 August.

However, during the coalition talks he had been unmasked as a longtime Stasi informer by the West German news magazine Der Spiegel.