The Liberal Party was originally founded in December 2012 as the People’s Life Party (生活の党), renamed in 2014 as the People's Life Party & Taro Yamamoto and Friends (生活の党と山本太郎となかまたち), then renamed again in 2016 as the Liberal Party after another reorganization. The People’s Life Party formed in response to the general election in December 2012, which greatly reduced membership from the Tomorrow Party of Japan (日本未来の党); Ichirō Ozawa had left the Democratic Party of Japan (民主党) in July 2012 to found a short-lived party, the People’s Life First (国民の生活が第一), which became the Tomorrow Party of Japan later.
In 2015, Ozawa published a statement as the leader of the party, criticizing the security bills that the Abe administration proposed in the Diet for violating the constitution; Ozawa said the bills would grant Japan unlimited ability to exercise its collective self-defense right, which would go beyond the stipulation of Article 9. Ozawa argued that Japan’s contributions to resolve international conflicts should primarily follow the UN’s direction.
In April 2019, Ozawa and all other members from both houses (six in total), except for Yamamoto, joined the Democratic Party for the People (国民民主党), Yamamoto founded a new political party, Reiwa Shinsengumi (れいわ新選組).