It was formed when six members of the SPD Reichstag faction (Kurt Rosenfeld, Max Seydewitz, August Siemsen, Heinrich Ströbel, Hans Ziegler and Andreas Portune) were expelled for breaking party discipline.

The newly-founded party was joined by other SPD left-wingers (including some well-known politicians such as Anna Siemsen and Käte Frankenthal), its youth association, the SAJ, a part of the KPO around Paul Frölich, Jacob Walcher, August Enderle, August Ziehl and Heinrich Galm, some groups and individuals from the reconciliation faction of the KPD such as Heinrich Stahmer, the remaining USPD around Theodor Liebknecht, the Socialist League of Georg Ledebour, the Working Group for Left Socialist Politics around Fritz Küster, an entryist group of the Red Fighters around Bernhard Reichenbach (expelled in 1932) as well as well-known independent Marxist intellectuals such as Fritz Sternberg.

The SAPD vehemently advocated a united front of the SPD, KPD, trade unions and other mass organizations of the workers' movement against fascism; this was not successful due to the rejection of this strategy by the leading party bureaucracies.

Together with the KPO and the Lenin League, the SAPD held a series of anti-fascist rallies and discussion events at which the idea of a united front was propagated.

At the beginning of 1933, factional disputes within the SAPD came to a head when the majority of the executive committee around Rosenfeld and Seydewitz advocated a dissolution of the party in favour of the SPD and KPD.

The SAPD left (around the former KPO members Fröhlich and Walcher, the intellectuals Sternberg and Klaus Zweiling and the leadership of the SJVD) sought to build a new revolutionary party and a new communist international.

[3] Many SAPD members, especially those known to the public, emigrated; many of those who remained in Germany were locked up in prisons or concentration camps; some, such as Ernst Eckstein and Franz Bobzien, were murdered.

In 1937, a group of members led by Erwin Ackerknecht, Walter Fabian and Peter Blachstein were expelled from the party after they had criticized the SAPD's overly uncritical stance towards the KPD and the Moscow Trials.

Some former SAPD members, such as Fritz Lamm, played an important role in the independent radical left of the 1950s and 1960s, while others joined the Workers' Politics Group, which followed in the tradition of the KPO.

In his home town of Lübeck, the young Herbert Karl Frahm, later known as Willy Brandt, joined the SAPD against the advice of his mentor Julius Leber.