We examine the origins of direct democracy in the American states and assess how direct democracy has affected American political parties. We find adoption of the most directly democratic forms of the initiative in states where Populist forces were strongest in the 1890s. Use of the initiative throughout the twentieth century led to more restrictive state legal environments for parties and was associated with weaker traditional party organizations. American parties have subsequently challenged restrictions placed on their organizations and on their ability to engage in campaigns. By the end of the twentieth century, American party organizations were visible actors in direct democracy campaigns, however their role is-different from that of parties in Europe.