The FAU sees itself in the tradition of the Free Workers' Union of Germany (German: Freie Arbeiter Union Deutschlands; FAUD), the largest anarcho-syndicalist union in Germany until it disbanded in 1933 in order to avoid repression by the nascent National Socialist regime, and to illegally organize resistance against it. The FAU was then founded in 1977 and has grown consistently all through the 1990s. Now, the FAU consists of just under 40 groups, organized locally and by branch of trade. Because it rejects hierarchical organizations and political representation and believes in the concept of federalism, most of the decisions are made by the local unions. The federalist organization exists in order to coordinate strikes, campaigns and actions and for communication purposes. There are 800-1000 members organized in the various local unions.
The FAU publishes the bimonthly anarcho-syndicalist newspaper Direkte Aktion as well as pamphlets on current and historical topics.
After Lone Star Funds announced it would close a bicycle factory in Nordhausen, Thuringia, it had acquired, its workers decided to occupy the factory in July 2007. From October 22 through 26, the workers continued the bicycle production. With the help of the FAU, over 1,800 of these red bicycles were sold under the label "Strike Bike". The occupation of the factory ended after the company's liquidator forced the workers out.
On December 11, 2009, the Berlin District Court issued an injunction on the Free Workers' Union Berlin (FAU-B) banning it from calling itself a union or grassroots union. The court decision was confirmed on January 5, 2010. The FAU views this as "the culmination of a series of attempts by the Neue Babylon Berlin GmbH to legally hogtie the strongest and most active form of workers' representation in the company. This attack on the basic right of freedom of association is a de facto ban of the union in Berlin". On June 10, 2010, the Kammergericht overturned the injunction.