The Communist Party of Canada was founded in 1921 at a secret meeting held in a barn in Guelph, Ont, by 3 representatives from the Communist International and 21 Canadians. This group established the Workers' Party in February 1922. The names of the participants remained secret until 1924 when the Workers' Party was abolished and the Communist Party became the speaker for the Communist International in Canada.

The Party program was based on the teachings of Vladimir Lenin as adopted at the first meeting of the Communist International held in Moscow in 1919. Lenin elaborated upon the Communist Manifesto, written by Karl Marx and Frederick Engels in 1848, by adding 21 revolutionary points that differed from any other socialist doctrine.

From the Party's inception, the Royal Canadian Mounted Police (RCMP), acting under Section 98 of the Criminal Code, harassed the Party, broke up its meetings, raided its offices, confiscated its literature and in 1931 arrested its main leaders. This section of the Code was finally declared illegal by Parliament in 1937 during Mackenzie King's tenure as prime minister. However, the Quebec legislature under the Union Nationale passed the Padlock Act in 1937, which authorized the attorney general to padlock any house or building in which he believed communism was being propagated. This act was declared ultra vires (outside provincial jurisdiction) by the Supreme Court of Canada in 1957.

Many members of the Communist Party became leaders in the trade unions and organizers of new unions, especially among industrial and unskilled workers. During the 1930s, the communists in Canada and in the United States were successful in organizing a number of industries under the new Congress of Industrial Unions (CIO). They were also instrumental in organizing the On to Ottawa Trek and the Canadian Youth congress. They recruited over 1500 men to the International Brigade (Mackenzie-Papineau Battalion) in the fight against the fascist forces of Franco, Hitler and Mussolini in Spain.

After 1930 the Communists succeeded in electing a number of members to municipal and provincial offices and Fred Rose to the federal House of Commons. Among those were Jacob Penner and Joseph Zuken, who held municipal office in Winnipeg from 1934 to 1983; A.A. MacLeod and J.B. Salsberg, who were elected to the Ontario legislature in 1943; and W.A. Kardash, who was elected to the Manitoba legislature in 1941. During that period Tim Buck was leader of the Party and was well known throughout the country. Dr Norman Bethune was another Communist who became a hero to the anti-fascist cause in the Spanish Civil War and to the Chinese in the Chinese Revolutionary War.

The Canadian Communist Party supported the war against Hitler initially, but within 10 days, on orders from Moscow, reversed its position. As a result the Party was banned in Canada, and over 100 leading members were interned. On 22 June 1941, Germany attacked the Soviet Union, and the war on the Eastern front became the focus of military action, in which millions were killed. The Canadian Communist Party changed its position again to support the war against Germany and emerged as the Labour-Progressive Party of Canada.

In 1945 Igor Gouzenko, a former clerk in the Soviet embassy in Ottawa, revealed that a number of prominent Canadians were involved in providing information to the Soviets during the war. As a result, Fred Rose was arrested and convicted of espionage and sentenced to 6 years in prison. Others, including Sam Carr, a leader of the Party for many years, were also convicted. Most of those charged were released for lack of evidence.

After Lenin's death in January 1924, a bitter struggle ensued inside the Soviet Communist party in Russia, which ended in a victory for Josef Stalin in 1928, and a crushing defeat for the other members of the Political Bureau. Stalin ruled the Soviet Union and was the recognized leader of the Communist parties of the world until his death in March 1953. During these years, criticism of Stalin's anti-democratic methods was expressed by governments, writers and political activists throughout the world. In particular, the Moscow Trials in 1936, which resulted in the execution of prominent Soviet leaders, the invasion of Finland, the evidence of Soviet labour camps, and the Soviet-German pact, all resulted in outright condemnation, which was dismissed by communist parties as anti-Soviet propaganda. Hostility to the Soviet Union, however, abated substantially when the Soviet Union joined the war against Hitler and the Soviet Army was decisive in defeating Germany.

In 1956, at the 20th Congress of the Soviet Union, Nikita Khrushchev, First Secretary of the Communist Party of the Soviet Union, exposed the brutality of the Stalin regime. As a result, many former communists, including prominent leaders, resigned or formed new parties. The Soviet Union's invasion of Hungary and Czechoslovakia, and the Sino-Soviet tension, further accelerated the disintegration of the communist parties throughout the world. This process continued throughout the regime of Leonid Brezhnev and eventually resulted in the collapse of the Soviet Party and the government of Mikhail Gorbachev.

In Canada these events were reflected in the split of the Party into two parts in the early 1990s after the collapse of the Soviet bloc - those who supported and those who repudiated Stalinism. It was also at this time that the Young Communist League ceased to function in Canada. Several other communist parties in Canada have rejected Stalinism, the most important being the Communist League and the Communist Party of Canada (Marxist-Leninist). The Communist League has always supported Leon Trotsky's writings, but it has also supported the Cuban government of Fidel Castro and the ideas of Che Guevera. Members are actively involved in the labour movement and social issues. The League has bookstores in Vancouver, Toronto and Montréal, and also promotes a weekly journal, The Militant, which is published in New York.

The remaining members of the Communist Party publish a monthly periodical called The Peoples Voice and field candidates in elections, but their numbers remain small. When it failed to run more than the required 50 candidates in the 1993 election, Elections Canada deregistered the Party. Furious Communist Party members retaliated with a lawsuit (Figueroa vs. Canada), retaliating against the 50-candidate rule instituted by Brian Mulroney's government in the 1980s. Ultimately, the Supreme Court of Canada deemed the 50-candidate rule unconstitutional, a welcome decision for all small parties across Canada, including the Communist Party, who desire to offer Canadians an alternative regardless of whether they have the capacity to be a viable "government option." More recently, Canada's stand on the Iraq War in 2003 has led to a resurgence of interest in the party, including a revival of interest in the Young Communist League in 2004.