Founded in 1999
, the Center Party, like Dash before it, sought to position itself between the Likud and Labor and to create a new alternative in the elections for the 15th Knesset. The initial push for the establishment of the new party was discontent among prominent members in the Likud, who were disappointed with Prime Minister Netanyahu, and among members of the Labor Party, who were disappointed by the poor results of party leader Ehud Barak in opinion polls. There were also calls for shaking up the party system and putting an end to the traditional stalemate between the two major blocs, with goals such as weakening the power of the ultra-Orthodox and religious parties.
Among those involved in the new party in its early stages were Dan Meridor and Roni Milo, who were joined subsequently by Amnon Lipkin-Shahak. Forming the backbone of the party, these three agreed to cooperate and give the role of party leader to the individual who would likely gain the greatest degree of public support. In early 1999, the three approached other politicians. Among them was Defense Minister Yitzhak (Itzik) Mordechai, whom Netanyahu consequently fired, and whom the Center Party then chose to run as its candidate for Prime Minister. Once early elections were called, additional figures, such as Hagai Merom and Nissim Zvili from the Labor Party, Eliezer Sandberg from Tzomet, David Magen from Gesher, and Yitzhak Rabin's daughter Dalia Rabin joined the party.
Although he was extremely popular at the beginning of the campaign, Yitzhak Mordechai declined in popularity as Election Day drew closer. Mordechai quit the race on the eve of the elections, paving the way for Ehud Barak’s victory. The Center Party itself received only six seats, much fewer than the rosy predictions at the outset. The party joined the Barak government, but in the course of the 15th Knesset it rapidly disintegrated, as Dash (the Democratic Movement for Change) had done before it. In the elections for the 16th Knesset, the party ran on a list called the Centrist Party, headed by David Magen, but failed to pass the electoral threshold.