On the outbreak of the First World War, the SDP leader, Friedrich Ebert, ordered members in the Reichstag to support the war effort. Karl Liebknecht was the only member of parliament who voted against Germany's participation in the war. He argued: "This war, which none of the peoples involved desired, was not started for the benefit of the German or of any other people. It is an Imperialist war, a war for capitalist domination of the world markets and for the political domination of the important countries in the interest of industrial and financial capitalism. Arising out of the armament race, it is a preventative war provoked by the German and Austrian war parties in the obscurity of semi-absolutism and of secret diplomacy."

In April 1917 left-wing members of the Social Democratic Party (SDP) formed the Independent Socialist Party (USPD). Members included Kurt Eisner, Karl Kautsky, Emil Barth, Julius Leber, Ernst Toller, Ernst Thälmann, Rudolf Breitscheild, Emil Eichhorn, Kurt Rosenfeld, Ernst Torgler and Rudolf Hilferding.

At its congress in Halle in October 1920, a split occurred in the party. Left-wing members left to join the German Communist Party (KPD). The Independent Socialist Party continued until 1922 when it merged with the Social Democratic Party.