The kibbutz was established in 1947 in the Halutza dunes, and was originally known as Mashabim (Hebrew: משאבים, lit. Resources). During the 1948 Arab-Israeli War the kibbutz was attacked by the Egyptian army, but was retained by Israel. After the war ended it relocated to its present site. It was renamed Mashabei Sadeh in honour of Palmach leader Yitzhak Sadeh who died in 1952.
Apart from agriculture (field crops, poultry and dairy), the kibbutz breeds shrimp using special aquaculture techniques. It also operates a factory, Sagiv, that produces brass ball-valves and fittings, and runs a guesthouse. It is also the only Kibbutz in Israel to breed the Australian fish Barramundi.