Since its foundation in 1889, the Social Democratic Party has often been one of the main political forces in Austria. At the start of the First World War it was the strongest party in parliament, and on the ending of that war in 1918 the party leader Karl Renner became chancellor of the First Republic. The party lost power in 1920, but retained a strong base of support in the capital Vienna. A period of rising political violence culminated in the banning of the Social Democratic Party under the Austrofascist dictatorship (1934–38).

In 1918, the Socialists supported union with Germany, but the Allies forbid this in the treaty of St. Germain. When the Nazis took power in Germany the Socialists changed their view on the Anschluss, which took place in 1938 and brought Austria into the Second World War. In 1945 the party was reconstituted as the "Socialist Party of Austria" (Sozialistische Partei Österreichs, SPÖ), led by Adolf Schärf. The party entered the government of the Second Republic as part of a grand coalition with the People's Party (ÖVP) until 1966, Renner becoming the Republic's first president.

From 1971 to 1983, under Bruno Kreisky, the Socialist Party was the sole governing party. For the following three years it ruled in coalition with the Freedom Party (FPÖ), then up to 2000 it was again part of a grand coalition with the ÖVP, with Franz Vranitzky as Chancellor until 1997. In 1991 it reverted to including "Democratic" in its name, becoming the "Social Democratic Party of Austria" (Sozialdemokratische Partei Österreichs).

During this period, the grand coalition combined with the "Proporz" systemwhereby important posts throughout the government were shared out between members of the two main partiesevoked rising discontent. This was a factor in the growing popularity of the FPÖ, which came second to the SPÖ in elections in 1999. The following year the FPÖ and ÖVP formed a rightwing coalition, displacing the Social Democrats from a share in government. While this coalition was still in power, the Social Democrat Heinz Fischer was elected president in 2004. Following the 2006 elections another grand coalition was formed between the SPÖ and ÖVP, this lasting until 2017.

From the beginnings until 1918 Socialist and worker's movements and associations had already started to form in Austria by the mid-19th century. The party's first meeting took place in 1874 in Neudörfl in what later became Burgenland. The following years saw factional infighting, and the party split into moderate and more radical factions.

It was united in 1889 as the Social Democratic Workers' Party of Austria (, SDAPÖ) through the work of Doctor Victor Adler. At the party congress in Hainfeld, the party decided to accept Adler's Declaration of Principles on 30 December 1888. 1 January 1889 is therefore considered the party's founding date. On 12 July 1889 the first issue of the party newspaper the Arbeiter-Zeitung was printed. Initially close to Marxism, the party continued to grow especially in Vienna and the industrial areas of Bohemia, Moravia, Styria, Lower Austria and Upper Austria.

The party participated in the founding of the Second International in Paris on 14 July 1889. The party campaigned for more rights for workers, including their right to vote. In the Brünner Programm of September 1899, the Socialists demanded that the Austro-Hungarian Empire be reformed into a federal democratic state.

The Social Democrats were allowed to run in the City Council (Gemeinderat) elections of Vienna on 30 May 1890.

In Trieste the Italian-speaking "Social Democratic League" (Lega Social Democratica) decided at its congress in December 1897 to change its name to "Adriatic Italian Section of the Social Democratic Workers' Party of Austria" (Sezione Italian Adriatica del Partito dei Lavoratori Social Democratici in Austria). Notably, the Trieste Socialists preferred to use the label "socialist" rather than "social democrat".Winkler, Eduard. Wahlrechtsreformen und Wahlen in Triest 1905 – 1909: eine Analyse der politischen Partizipation in einer multinationalen Stadtregion der Habsburgermonarchie. Südosteuropäische Arbeiten, 105. München: Oldenbourg, 2000. pp. 84–85

In 1907, after a general strike, universal suffrage was granted. In the elections to the House of Deputies in the Reichsrat, the Social Democrats were able to win many votes. Out of a total of 516 seats, the party won 87 seats, becoming the second strongest fraction in parliament after the Christian Social Party. Eventually, by 1911, the Socialists became the strongest party in parliament.

The party initially supported the declaration of war against Serbia after the Assassination in Sarajevo of Archduke Franz Ferdinand and his wife Sophie, Duchess of Hohenberg in 1914, but soon realised that the disastrous war was untenable. After the death of Emperor Franz Joseph, the first peace-meeting was held in December 1916. By January 1918, strikes were breaking out, calling for an end of the war and the terrible suffering that the people, especially the worker's families, had to endure.

By October, a provisional national assembly ("Provisorische Nationalversammlung") was convened under the Social Democrat Karl Renner, which tried to work out a provisional constitution (Provisorische Verfassung) under the leadership of a new state council led by the new state chancellor Renner. The Social Democrats wanted a new form of government and, on 12 November 1918, the republic was proclaimed by Renner. Renner's government introduced an eight-hour workday and paid holidays.A Concise History of Austria by Steven Beller

First Republic The party had moderate success in the 1920s, but its conflict with right wing forces escalated until it was defeated in the Austrian Civil War.

Establishment of the First Republic The SDAPÖ played an important role in the establishment of the First Republic. On 11 November 1918 Emperor Charles I relinquished his right to take part in Austrian affairs of state. The following day Karl Renner was declared Chancellor of the Republic of German-Austria.

The Bohemian provincial organization of SDAPÖ held a conference in Teplice 31 August – 3 September 1919 at which it re-constituted itself as a separate party, the German Social Democratic Workers Party in the Czechoslovak Republic.

The party clearly wanted to steer Austria towards political union with Germany, calling the new Austrian republic "Deutsch-Österreich" (German-Austria). But the Treaty of St. Germain clearly forbade any unification between Austria and Germany. The SDAPÖ nevertheless still advocated such a union during the existence of the First Republic, as they hoped for a strengthening of their position and the socialist cause within a Greater Germany.

In the first elections for the constitutional national assembly on 16 February 1919, women were allowed to vote for the first time. The SDAPÖ became the strongest party and formed a grand coalition with the anti-AnschlussDIVIDE ON GERMAN AUSTRIA. – Centrists Favor Union, but Strong Influences Oppose It., The New York Times, 17 January 1919 (PDF) Christian Social Party (CS).

Red Vienna In May, elections for the city council of Vienna followed: out of 165 mandates the social democrats won 100 seats. Jakob Reumann became the first social-democratic mayor of Vienna. Vienna was going to continue to be the stronghold of the socialists in a largely conservative-governed nation. The socialist-led city government built the first Gemeindebauten for the working class, such as the Karl-Marx-Hof, Sandleitenhof, and the public housing estates on the Gürtel ring road, and instituted social, healthcare and educational reforms. These measures indeed ameliorated the living conditions for workers and raised their standard of living. This deepened the ties of workers towards the party and created a large pool of loyalists on whom the party could always depend, giving rise to the term "Rotes Wien" (Red Vienna) of the 1920s.

The party was a member of the Labour and Socialist International between 1923 and 1940.Kowalski, Werner. Geschichte der sozialistischen arbeiter-internationale: 1923 – 1940. Berlin: Dt. Verl. d. Wissenschaften, 1985. p. 312

Within the grand coalition, the parties were able to agree on a package of reforms such as the 8-hour-day (8-Stunden-Tag), the worker's council law (Betriebsrätegesetz) and negotiations for a new republican constitution, which came into force on 10 November 1920. After the parliamentary elections in October 1920, the SDAPÖ left the grand coalition after the CS won the majority of votes. The Socialists would remain in opposition during the First Republic.

But the SDAPÖ continued to be internally divided in roughly two wings: on the one side were the moderates under the leadership of former chancellor Karl Renner, who advocated a parliamentary, liberal democracy and the welfare state; on the other side were the more radical Austromarxists under the leadership of Otto Bauer. Especially the latter part did not wish any further cooperation with the CS, which led to an increase in political instability over time as political views became grew more extreme and fractious.

Feeling increasingly under threat, most political parties formed their own military wings. In May 1924, the SDAPÖ founded its own paramilitary wing, the Republikanischer Schutzbund (Republican Protection League). The Communist Party of Austria (KPÖ) formed its Red Brigades and the conservative CS followed suit, founding its Heimwehr (Homeland Protection Force). The existence of armed political militias and vigilante groups, alongside the regular police and army forces, did not bode well for the stability of the young republic. The founding of these militias was a response to increased political tension, but also aggravated it, increasing the chances of open, violent clashes as political parties within parliament continued their fighting. On 3 November 1926, the so-called "Linzer Programm" was agreed upon at the SDAPÖ party convention, which was heavily influenced by Otto Bauer's wing and reinforced the differences between the opposition Christian Social Party and the Social Democrats.

On 30 January 1927, members of the conservative Heimwehr shot at members of the Republikanischer Schutzbund in Schattendorf, resulting in two deaths. In the Schattendorfer Urteil trial that followed, the jury found the accused not guilty in July 1927. Members of the Republikanischer Schutzbund, the SDAPÖ, and workers were outraged by this verdict and launched demonstrations on 15 July to protest. The mob vented its frustration, and eventually moved towards the Palace of Justice, setting it on fire. Clashes with the police left 85 workers and four policemen dead and up to 600 people were injured. The burning of the Palace of Justice and the bloodshed surrounding it symbolised a break within the republic, marking the coming end of democracy.

The political atmosphere became increasingly poisoned and untenable. The conservatives shored their position against the Social Democrats, and on 18 May 1930 the Heimwehr of the CS issued its Korneuburger Eid (Oath of Korneuburg), in which it openly called for the overthrow of the parliamentary democracy ("Wir verwerfen den westlichen demokratischen Parlamentarismus und den Parteienstaat!")Brook-Shepherd, G. The Austrians. HarperCollins Publishers Ltd. London, 1995. , page 366 Both under the Austro-fascist dictatorship (1934–1938) and during the German occupation of Austria between 1938 and 1945, the SDAPÖ was banned and persecuted heavily, but after liberation, the Social Democrats became a major political force in post-war Austria.

During Austrofascism