The army was formed on 12 March 1989, after the local Communist Party of Burma leader, Pheung Kya-shin, dissatisfied with the communists, broke away and formed the MNDAA. Along with his brother, Peng Jiafu, they became the new unit in Kokang. The strength of the army is between 1,500 and 2,000 men. The rebels soon became the first group to agree to a ceasefire with the government troops. Thus the Burmese government refers to the Kokang region controlled by the MNDAA as ‘Shan State Special Region 1’, indicating the MNDAA was the first group in the area of Shan State to sign a ceasefire agreement. After the ceasefire, the area underwent an economic boom, with both the MNDAA and regional Myanmar Armed Forces troops benefiting financially from increased opium harvests and heroin-refining. The area also produces methamphetamine. The MNDAA and other paramilitary groups control the cultivation areas, making it an easy target for drug trafficking and organised crime groups. The Peace Myanmar Group allegedly launders and reinvests MNDAA's drug profits into the legal economy.
In August 2009, the Myanmar National Democratic Alliance Army became involved in a violent conflict with Myanamar armed forces. This was the largest outbreak of fighting between ethnic armies and government troops since the signing of the ceasefire 20 years earlier. As a result of the conflict the MNDAA lost control of the area and as many as 30,000 refugees fled to Yunnan province in neighbouring China.
2015 offensive
On 9 February 2015 the MNDAA tried to retake the Kokang Self-Administered Zone, which had been under its control until 2009, and clashed with Burmese government forces in Laukkai. The skirmishes left a total of 47 Government soldiers dead and 73 wounded. After several months' fierce conflict,Kokang insurgents failed to capture Laukkai. After the incidentthe government of China was accused of giving military assistance to the ethnic Kokang soldiers.
2017 clashes
On 6 March 2017, MNDAA insurgents attacked police and military posts in Laukkai, resulting in the deaths of 30 people.