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From its establishment in 1973, Likud enjoyed great support from blue-collar Sephardim who felt discriminated against by the ruling Alignment.

Likud made a strong showing in its first elections in 1973, reducing the Alignment's lead to 12 seats.

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After the party recorded a convincing win in the 2003 elections, Likud saw a major split in 2005 when Sharon left to form the Kadima party.

Herut remained the senior partner in the new grouping, which was given the name Likud, meaning "Consolidation", as it represented the consolidation of the Israeli right.

It worked as a coalition under Herut's leadership until 1988, when the member parties merged into a single party under the Likud name.

Yitzhak Shamir (who had expressed harsh disappointment in Netanyahu's leadership), gave the new party his support.

Less than a year afterward, Netanyahu's coalition collapsed, resulting in the 1999 election and Labor's Ehud Barak winning the premiership on a platform of immediate settlement of final status issues. Barak's "all-or-nothing" strategy failed, however, and early elections for Prime Minister were called for March 2001.

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