Why do political parties form? I test a theory of party formation in which legislators coalesce into voting blocs to coordinate their votes and influence policy outcomes. I use historical roll‐call data from the United States Congress. During the First and Second Congresses (1789–1793), there were no organized political parties. By the Fourth Congress (1795–1797), the Federalist and Republican parties shaped Congress. The analysis uses the Roll‐call data from the first two Congresses to predict which legislators will coalesce into parties in future Congresses. I compare this prediction with the parties that eventually emerged in the House and in the Senate. I find strong support for the theory in the Senate, and favorable but less significant results in the House.