The group was formed in 1976 at Kentucky State University by trumpeter Reggie Calloway, vocalist Belinda Lipscomb, guitarist/drummer/vocalist Melvin Gentry, bassist Kenneth Gant, multi-instrumentalist Bill Simmons, keyboard player/vocalist Bo Watson and guitarist/keyboardist Jeff Cooper, as a self-contained group. They would later add non-KSU student trombonist Vincent Calloway (Reginald's younger brother). A 1978 New York City showcase inspired SOLAR Records chief Dick Griffey to sign the group. They released their debut album The Beginning (1980) with some guest studio musicians. In 1981 their second album, released on Solar Records, Standing Together, reached position #54 on the U.S. R&B chart. In 1982 they released a third album, Victory.

Utilizing elected band leader Reggie Calloway's production skills, it did not take long for Midnight Star to hit the U.S. R&B chart with early singles like "Hot Spot" and "I've Been Watching You". Drummer Bobby Lovelace joined the group in late 1982, freeing Gentry to sing and play guitar exclusively. Their fourth album, No Parking on the Dance Floor, was released in 1983, and it took them almost to the top of the charts with the first single, "Freak-A-Zoid", which went to number two on the U.S. Black Singles chart. Other singles from the album included "Wet My Whistle", and the title track. These singles, along with the hit album tracks "Slow Jam" (co-written by Kenneth "Babyface" Edmonds) and "Electricity" propelled the album to double platinum status.

Their next album, Planetary Invasion, was almost as big, selling platinum again and making the pop Top 20 and the number one spot on the R&B chart with its first single, "Operator". This song remains the band's only Billboard Hot 100 Top 40 hit to date. In 1986 they released their sixth album, Headlines, which was their third album to sell at least gold. It was to be their last with the Calloway brothers. Due to irreconcilable differences with the other members, Reggie was out of the group and Vincent left shortly thereafter.

They achieved their biggest success in the UK with "Midas Touch", which made #8, and "Headlines", a #16 hit earlier the same year. Without the Calloways (who would go on to form the group Calloway and release an album that spawned the hit single "I Wanna Be Rich" in 1989), Midnight Star recorded two more albums, the self-titled Midnight Star and Work It Out. These two albums proved not as successful as their previous three release, but did bear fruit with Top Ten R&B singles such as: "Don't Rock The Boat" and "Snake In The Grass". The group went on a long hiatus, though they never officially broke up.

The group reunited in 2000 with many of the original members (including all of the singers) and released the album 15th Avenue two years later. Since then, the group has toured sporadically, most recently with a lineup that includes Belinda Lipscomb, Kenneth Gant, Melvin Gentry, Bo Watson, and Bobby Lovelace, with Bill Simmons sometimes joining as well.