The Socialist Party is an independent incarnation of the Congress Socialist Party (CSP) formed in 1934 within the Congress. The CSP was founded by Jaiprakash Narayan, Acharya Narendra Dev, and Dr. Ram Manohar Lohia. It merged itself into the Janata Party in 1977. Efforts to revive the Socialist Party started after the disintegration of the Janata Party and were strengthened by the Indian Socialist Meet held in Pune in 2002.

Surendra Mohan and Panna Lal Surana were entrusted with the responsibility of taking the lead in this task and worked to bring together various socialist outfits and individuals. After a year-long deliberation undertaken through a series of meetings held in different cities of the country, several socialist groups and individuals met in a two-day foundation conference held in Hyderabad on 28–29 May 2011 and formed the Socialist Party (India).

The party was envisioned as a means to carry forward the legacy of India's great socialist leaders and thinkers. Around 600 delegates from 19 states were present at the conference. Veteran journalist and writer Kuldip Nayar and Justice Rajinder Sachar were also in attendance.

The conference elected the following office bearers: President – Bhai Vaidya, General Secretary and Spokesperson – Dr. Prem Singh, Treasurer – Jayanti Bhai Panchal, General Secretary – Nurul Amin, General Secretary – Onkar Singh and 28 national executive members including Panna Lal Surana, Prof. Keshavrao Jadhav, Dr. Sanmath Nath Ghosh, Sandeep Pandey, Balwan Singh Kheda, Shiva Tripathi and Sunita Bakshi.

A Coordination Committee, having Panna Lal Surana as its Convener and Lingraj, President of Samajwadi Jan Parishad, as a member was formed to approach other radical socialist groups and individuals for joint actions and programmes. Socialist Janata Party President Smt. Manju Mohan and Loktantrik Samajwadi Party President Raghu Thakur also gave their consent to join the Coordination Committee.