Prior to the formation of Malaysia on September 16, 1963, USNO played a major role in cooperation with UPKO (United Pasokmomogun Kadazandusun Organization), led by Tun Fuad Stephens, and the Federation of Malaya, in attaining independence from Great Britain.
In 1975, USNO's secretary-general Harris Salleh quit the party and teamed up with UPKO to create a new party called BERJAYA. This new party defeated USNO in the 1976 state election to form government until 1985. USNO consistently continued to participate in state elections of 1981, 1985, 1986, and 1990, winning several state electorates, however never enough to form government again.
In 1990, USNO teamed up with Harris' BERJAYA to form the Sabah chapter of the United Malays National Organisation (UMNO). Tun Mustapha became the first president of Sabah UMNO.