The state organization was established in 1899, when the Kangaroo faction bolted from the Socialist Labor Party of America in support of the American Federation of Labor and opposition to the internal regime of the SLP under Daniel DeLeon.

Its initial electoral appearances were unimpressive, but it began to grow rapidly after 1905, and eventually became, together with the organizations in Wisconsin, Oklahoma, Oregon, North Dakota, Washington, New York, etc., one of the Socialist Party's stronger state organizations—even to the point where, in 1912, half of all of the counties carried by Eugene V. Debs were in Minnesota.

But, in spite—or perhaps because—of its rapid growth, the Socialist Party of Minnesota soon also became a heavily contested battlefield for factional disputes within the SPA.

This culminated in the period of 1914 though 1919, in which the Socialist Party of Minnesota was decimated by conflicts rooted first in differences of opinion regarding the United States' entry into World War I, and later disagreements over the Bolshevism question following the Russian Revolution.

The Minnesota organization continued to send delegates to the national conventions of the Socialist Party through the 1960s, until the Social Democrats, USA were formed in 1972.