The party evolved out of the Flag Group wing of the British National Front (NF), which gained control of the NF during the early 1990s. Party leader Ian Anderson sought to change the name of the NF to the National Democrats. 72% of the membership voted for the change in a postal ballot; by changing the name it was hoped to avoid the connotations associated with the NF name. However, the move was resisted by other NF members and so the National Democrats came into existence as a new party.
The party contested two parliamentary by-elections in 1996. In Hemsworth, Mike Cooper received 111 votes (0.5%) and, in South East Staffordshire, Steve Edwards received 358 votes (0.8%). Although the NDs never took part in regularly scheduled European elections, they did contest the Merseyside West by-election in which Simon Darby stood but only gained 718 votes (1.2%).
In the 1997 general election, the party contested 21 seats and received a total of 10,829 votes, compared to 35,832 for their rivals in the British National Party (BNP), and 2,719 votes for the NF. The party's best result was in West Bromwich West, where Steven Edwards received 11.4% of the vote. However, this was not a normal constituency, since this was the constituency of then House speaker Betty Boothroyd, which major parties by convention do not contest. The NDs were severely damaged immediately before the 1997 election when it was revealed by The Sunday Times and the Daily Mail that leading member Andy Carmichael was working for MI5. Where the West Midlands had been a stronghold, it now began to fall apart, and in 1998, the local branch, which included leading ND activist Simon Darby, defected to the BNP, leaving only a small number of party loyalists behind. The party did not nominate candidates in the 2001 general election.
The party published a magazine called Vanguard, edited by Stephen Ebbs, and publication of the former NF paper The Flag continued, now in support of the new party.
By the beginning of 2002 the party had ceased political activity. It continued as a pressure group under the name Campaign for National Democracy; until 2008 the party officially ceased to exist after the death of its leader at the beginning of 2011.
Publication of The Flag magazine continued  but without reference to the National Democrats or the Campaign for National Democracy.
Simon Darby, parliamentary candidate, left the party in 1998 for the BNP and became its Press Officer.
Martin Wingfield,co-editor of The Flag, left the party in 2001 and joined the BNP and became editor of their Voice of Freedom paper.
Sharron Edwards, parliamentary candidate, left the party in 1999, stood as first candidate on the West Midlands list for the BNP in the 1999 European elections and later became deputy chairwoman of the BNP before help forming the Freedom Party.