The new party is headed by Gediminas Kirkilas, a former prime minister and now a member of the Seimas.
"This means that the monopoly on Social Democracy has come to an end. We have two Social Democratic parties in Lithuania," Kirkilas said at a news conference on Friday.
According to Kirkilas, LSDDP was founded by around 4,000 people and was joined by around 1,000 former members of LSDP and the Labor Party each, as well as some former members of the Order and Justice Party.
"About 40 percent of our members did not belong to any political party," he said.
LSDDP held its founding congress on March 24.
The establishment of LSDDP followed last year's split in LSDP, whose new leader, Gintautas Paluckas, initiated the party's withdrawal from the ruling bloc with the Lithuanian Farmers and Greens Union (LFGU).
However, the move was opposed by some of LSDP's influential veterans, who left the party, set up a separate Social Democratic Labor political group in the Seimas and signed a coalition agreement with the LFGU group in the parliament.