In 2008 they won the Latvian Cup, but in 2011 finished the Latvian Higher League championship in the 3rd position, becoming the bronze medalists. The current manager of the team is Ivan Tabanov. In 2012 they became the Latvian Higher League champions for the first time in the club's history.
The club was founded in 2001 under the name FK Ditton by a Latvian business-man Vladislavs Drīksne. Within the space of a few years the club had progressed from the local championship of Daugavpils to the Latvian Higher League. Ditton made their debut in the top tier of Latvian football in 2004. The debut was not as successful as expected and Ditton were relegated from the Latvian Higher League.
They started the 2005 season with a young team, but later some experienced players were added to the squad and Ditton managed to regain a place in the higher league. In 2006 Ditton were taken over by new investors. Ukrainian manager Sergei Yuran was invited to join the team staff, but he was soon replaced by Sergei Kiriakov. That season the club had their highest finish up to that point, finishing 5th in the championship.
At the end of 2006, Russian businessman Igor Malishkov became the main shareholder in the club. It was his decision to change the club's name to FC Daugava. Meanwhile he also created a plan to develop the infrastructure of the club and build a new stadium. Malishkov invited Sergei Petrenko, who was then famous for his success with Torpedo Moscow, to become manager of the team. Petrenko left the team in May 2007 for family reasons. In June 2007 Igor Gamula was appointed, but he only started managing the team in August 2008. Till then, the manager was Mihails Zemļinskis.
On 19 July 2008 the Daugava Stadium was opened. In 2008 the club won the Latvian Cup. On 8 February 2009, due to financial problems, FC Daugava merged with Dinaburg and formed one team under the name of Dinaburg for the 2009 season. That season Dinaburg were relegated from the Latvian Higher League due to suspicions of match fixing. Daugava then decided to create a team that would play in the Latvian First League the following season, meanwhile Dinaburg ended its existence, stating that the club's image was spoiled. As Daugavpils is one of the biggest cities in Latvia, the LFF came up with a proposal to offer Daugava a place in the Latvian Higher League. The offer was accepted and Daugava were given a chance to represent Daugavpils in the higher league in the 2010 season.
In 2011 the club achieved its best result until then, finishing third in the championship. In 2012 Daugava became the champions of the Latvian Higher League for the first time in the club's history.