The New Party was formed out of a split from the then-ruling Kuomintang (KMT) by members of the New Kuomintang Alliance in August 1993. Members of the Alliance had accused KMT Chairman Lee Teng-hui of autocratic tendencies and moving the party away from Chinese reunification. Co-founders of the New Party included Chen Kuei-miao. Originally, the party wanted to keep the name of the faction, but was prevented from doing so due to the similarity of names. The name "New Party" was seemingly inspired by the contemporary electoral success of the Japan New Party ("Nihon Shintō"; see Politics of Japan).
In the mid-1990s, the New Party attracted support from the KMT old guard as well as young urban professionals. The New Party was aided by former Finance Minister Wang Chien-shien and former Environmental Protection Administration Director Chao Shaokong, who had charismatic and clean images.