After the SPD supported German involvement in World War I in 1915, Luxemburg and Karl Liebknecht co-founded the anti-war Spartacus League which eventually became the KPD. During the November Revolution, she co-founded the newspaper (''The Red Flag''), the central organ of the Spartacist movement. Luxemburg considered the Spartacist uprising of January 1919 a blunder, but supported the attempted overthrow of the SPD-ruled Weimar Republic and rejected any attempt at a negotiated solution. Friedrich Ebert's SPD Cabinet crushed the revolt and the by sending in the , government-sponsored paramilitary groups consisting mostly of battle-hardened World War I veterans of the Imperial German Army. troops captured, tortured and executed Luxemburg and Liebknecht during the rebellion.
Due to her pointed criticism of both the Leninist and the more moderate social democratic schools of Marxism, Luxemburg has always had a somewhat ambivalent reception among scholars and theorists of the political left. Nonetheless, Luxemburg and Liebknecht were extensively idolised as communist martyrs by the East German communist government. The German Federal Office for the Protection of the Constitution (BVS) asserts that idolization of Luxemburg and Liebknecht is an important tradition of the 21st-century German far-left. Despite her own Polish nationality and strong ties to Polish culture, opposition from the Polish Socialist Party due to her stance against the 1918 independence of the Second Polish Republic and later criticism from Stalinists have made her a controversial historical figure in the present-day political discourse of the Third Polish Republic.