The origins of the Communist Party of Germany can be traced back to the split of the Social Democratic Party (SPD) during the First World War. The majority of socialists at that time supported their own government and voluntarily cooperated with the state system as intermediaries between the Kaiser’s government and the workers.

A smaller group of socialists disagreed with this course. As a result of the split in 1917, the Independent Social Democratic Party (USPD) was formed, whose members refused to support their own government, as well as the governments of other powers, and advocated for a revolutionary change of regime. Members of the USPD welcomed the February and October revolutions in Russia and did not hide their desire for a similar scenario for Germany. However, they did not take active steps and preferred to wait for the objective historical process to lead Germany to revolution.

Within the USPD, a radical group called "Spartacus" was formed, led by Karl Liebknecht and Rosa Luxemburg. Liebknecht was the son of one of the founders of the SPD, Wilhelm Liebknecht, and was known as a principled anti-militarist even before the war. Luxemburg was an outstanding figure in the transnational socialist movement. A native of the Russian Kingdom of Poland, Luxemburg was initially one of the leaders of Polish social democracy, and after moving to Germany, she became a leader in German social democracy as well. Additionally, Luxemburg established herself as a theorist of Marxist thought. Her work "The Accumulation of Capital" (1913) is considered one of the first conscious attempts to comprehend global capitalism as an interconnected and cohesive phenomenon. In her pamphlets on the Russian Revolution, published posthumously, Luxemburg criticized Lenin and the Bolsheviks for suppressing civil and political freedoms.

Liebknecht and Luxemburg believed that the "revolutionary situation" in Germany should not be awaited but hastened. For their revolutionary calls, they were arrested, and until October 1918, the leaders of the "Spartacus" group were imprisoned.

In October 1918, the liberalization of the Kaiser’s regime began in Germany to appease the Entente before peace negotiations. Liebknecht and Luxemburg, as political prisoners, were released from prison and resumed revolutionary agitation. In early November, a sailors' uprising began in Kiel, after which supporters of the USPD and "Spartacus" led street demonstrations across the country. On November 9, a few hours after reports of the Kaiser’s abdication and the proclamation of a democratic republic, Karl Liebknecht declared the Soviet Socialist Republic in front of a crowd in Berlin.

However, the full real power after the revolution passed to the "systemic" SPD, which intended to rule jointly with moderate "bourgeois" parties – the Centre and the left liberals. Although representatives of the USPD joined the first revolutionary government, they left it by the end of December. On the eve of the new year 1919, Liebknecht and Luxemburg finally separated from the "independent" social democrats and founded the Communist Party of Germany (KPD).

In the first days of January 1919, left-radical groups in Berlin, including the USPD and KPD, attempted to overthrow the "right-wing" social democratic government and establish a Soviet republic in Germany. This January uprising was suppressed by volunteer corps (Freikorps), which included a significant number of front-line veterans with ultra-right views. They disliked the social democrats, but the "non-systemic left" seemed an even greater threat to them. Liebknecht and Luxemburg were captured and killed without trial. According to an unproven version, the secret order for their extrajudicial execution was given by SPD leaders – head of government Friedrich Ebert and military minister Gustav Noske.

Throughout 1919, communists, as well as other left-radical groups, attempted to create Soviet republics across Germany. The most famous examples of this kind were the Bremen and Bavarian Soviet republics. All of them were soon crushed by the Freikorps. 

Communists boycotted the elections to the Constituent Assembly in January 1919. In July, it adopted the Weimar Constitution by a majority vote, which established a "bourgeois-democratic" rather than a Soviet republic in Germany.

Subsequently, communists made several more attempts to overthrow the Weimar Republic. In the wake of resistance to the right-wing Kapp Putsch in March 1920, workers' self-defense units formed the Ruhr Red Army, which temporarily took control of Germany's most industrial region. A year later, in March 1921, a communist uprising occurred in Central Germany. In the fall of 1923, during the hyperinflation crisis, the Comintern seriously prepared for a "German October." Communists then joined regional governments in Saxony and Thuringia in coalition with "left" social democrats and were ready to turn these states into a base for spreading the communist revolution throughout Germany. At the same time, an uprising occurred in Hamburg.

However, all these actions were suppressed by the social democratic state power with the support of the Freikorps and the Reichswehr. The putschist strategy of the communists did not find support even among the left-wing popular masses. At the turn of 1920 and 1921, the KPD finally united with the USPD, but within a few months, a significant part of the "independent" social democrats left the party. During this period, the KPD was torn by constant splits into factions, each with its own vision of party tactics and strategy.

By the mid-1920s, the KPD shifted from organizing futile putsches to participating in elections, and this strategy began to bear fruit. If in their first elections in June 1920, the communists received only 2% of the votes, by May 1924, they had 12.5%. 

In the spring of 1925, the organizer of the Hamburg uprising and the new party leader Ernst Thälmann was nominated as a candidate for the country's presidency. In the first round, he received 7% of the votes and took fourth place. In the second round, a contest was to take place between the consolidated right-wing candidate – Kaiser’s Field Marshal Paul von Hindenburg, and the consolidated republican candidate – the chairman of the Catholic Centre Party Wilhelm Marx. The communists refused to support the "bourgeois" Marx and did not withdraw Thälmann in the second round. He received 6.5% of the votes, and the monarchist Hindenburg surpassed the republican Marx by 3% – with 48% against 45%. The social democrats then declared that Hindenburg became president "by the grace of Thälmann."

In 1928, Thälmann, who began to orient himself towards Stalin as his Moscow patron, managed to finally defeat all "opposition" factions within the Communist Party. The expelled communists formed their small Trotskyist or Bukharinist groups, but they had no serious influence.

During the Great Depression, the KPD became the main electoral beneficiary of the crisis alongside the National Socialists. The communists' results steadily grew: 10.5% in 1928, 13% in 1930, 14.5% in July 1932, and 17% in November 1932. The KPD became the third most popular party in the country after the Nazis and social democrats. In Berlin and the Ruhr area, it was the most popular party.

In the 1932 presidential elections, the KPD again nominated Thälmann. In the first round, he received 13% of the votes, while Hitler received 30%, and the incumbent president Hindenburg received 49.5%. In the second round, Thälmann received 10%, compared to 37% for Hitler and 53% for Hindenburg.

In addition to revolutionary rhetoric, the Communist Party actively flirted with nationalism. The KPD demanded a revision of the Treaty of Versailles as unjust to Germany and the right for Germans to reunite with all their compatriots in a single socialist state.

Paramilitary communist organizations were very active. In the first half of the 1920s, these were the "Proletarian Hundreds," then the "Red Front Fighters' League" ("Rotfront"), and after its legal ban in 1929, the anti-fascist "Kampfbund." Communist militants regularly engaged in street clashes with Nazi stormtroopers, the right-conservative "Steel Helmet," and the social democratic "Reichsbanner."

According to Comintern instructions, in the early 1930s, the KPD leadership considered the party leadership of the SPD, not the National Socialists, as the main opponent of the workers' movement. Fascism and the capitalism that spawned it were "objectively" supposed to soon suffer inevitable historical defeat by the working class, but the social democrats, labeled "social fascists," confused the broad working masses and delayed the moment of their ultimate victory. The KPD called for a "united anti-fascist front" of the entire workers' movement, but this front implied the overthrow of the social democratic party leadership and the further following of the social democratic masses to communist instructions. In turn, the social democrats saw the communists as "red fascists" – as much enemies of the Weimar Republic as the Nazis, and therefore also refused to form an alliance between the two Marxist parties.

To be fair, it should be noted that uniting efforts would not necessarily have meant the defeat of the Hitler movement. Indeed, if the votes for the social democrats and communists in the Reichstag elections in November 1932 were combined, their 37.5% would be more than the 33% of the Nazis. However, the question of power was no longer decided in the Reichstag, but in the reception room of the conservative President Hindenburg. The number of parliamentary seats had no practical significance. Moreover, a united Marxist front would likely have united the "bourgeois" flank, which made up the remaining 60% of the electorate. Then it would have been even easier for the Nazis, who positioned themselves as defenders against the "red threat," to gain power.

Immediately after Hitler was appointed chancellor in January 1933, state repression against communists began. On the night of February 28, a Dutch communist from a marginal left-radical group, Marinus van der Lubbe, set fire to the Reichstag building, giving Hitler a pretext to move to full-scale legalized terror against all political opponents. Communists were considered the main target, and the KPD was effectively banned.

No organized resistance was offered by the communists. The main reason should be considered their belief in the "objectivity" of the historical process, according to which the Nazis were supposed to fall within a few months, and therefore the Communist Party should not risk its cadres in an uprising.

Despite intimidation and pressure in the last semi-free Reichstag elections in March 1933, the Communist Party still gained more than 12% of the votes. However, the communist deputies' mandates were immediately annulled. During this period, many party officials were captured, imprisoned, sent to concentration camps, or even killed. Among those arrested was the party leader Thälmann. Some party activists managed to emigrate, while others went underground and continued the struggle.

Reasons for the ultimate failure of the communists in the Weimar Republic:

• The KPD limited itself to "class" boundaries as a party of the working class;

• Orientation towards the working class led to a priority struggle against social democrats, who fought for the same electorate, rather than against the Nazis;

• The reputation of "revolutionaries" repelled the vast majority of the population;

• Organizational and ideological dependence on the Comintern and the Politburo in Moscow;

• Belief in the "objectivity" of historical processes led to an underestimation of the Nazi threat.

During the Nazi regime, many illegal communist groups continued to conduct underground struggle, engaging in agitation and sabotage. The party leadership in exile, following Comintern instructions, recognized the thesis of "social fascism" as erroneous and began to call for the consolidation of all anti-fascist democratic forces within the "Popular Fronts."

Some KPD leaders were destroyed in the USSR during the "Great Terror." In Germany itself, communist underground fighters were also regularly exposed, arrested, and executed. Ernst Thälmann was executed without trial in the Buchenwald concentration camp in August 1944.

After the defeat of Nazism in 1945, the negative experience of the split in the socialist movement was taken into account in the Soviet occupation zone. In 1946, local social democrats and communists united to form the Socialist Unity Party of Germany (SED), which was the ruling party of the GDR until 1990. Former KPD members – Wilhelm Pieck, Walter Ulbricht, Erich Honecker, and many others – formed the ruling elite of the new state.

Social democrats in West Germany refused to unite with the communists. In the first Bundestag elections in 1949, the KPD received almost 6%. However, in the next elections in 1953, it failed to overcome the five-percent barrier and did not enter the West German parliament. In 1956, the Federal Constitutional Court banned the Communist Party as extremist. Communists had to continue their activities as part of smaller and isolated groups.

In 2007, the historical successors of communist organizations from West and East Germany united in the "Left" party, which remains the main proponent of leftist ideas in German politics.