They were formed by surviving Khalai, Nerazim and Purifiers after the Fall of Aiur as a unified front against the threats they faced from the Zerg and Terran Dominion. They later came to be joined by some Tal'darim as well after the End War. They are led by Hierarch Artanis.
After Aiur became too infested by the Zerg for the Protoss to continue living on it, the Khalai Protoss were forced too abandon it and flee to the Dark Templar homeworld of Shakuras, where they were welcomed by Matriarch Raszagal.
There the surviving Khalai and Nerazim Protoss began to pool their resources and form the Daelaam as a united front against the Zerg. By 2502, the Daelaam was led by the young (by Protoss standards) Artanis. To retake Aiur from the Zerg, Artanis ordered the construction of a massive, powerful fleet known as the Golden Armada.
After Arcturus Mengsk was overthrown and Valerian Mengsk took control of the Terran Dominion, peace was established between the Dominion and Daelaam and the Second Great War came to a close.
After many years of preparation, the Daelaam made their move to retake Aiur from the Zerg, which had since fallen under the control of Amon. However, during their initial reclamation, Amon corrupted the Khala and brought the Golden Armada under his control. After Artanis was freed by the sacrifice of Zeratul, he led the remaining freed Protoss in escaping the planet.
The Daelaam later supported Alarak in his Rak'Shir duel against the Tal'darim Highlord Ma'lash, as Alarak had become aware of Amon's true nature and agreed to assist the Daelaam in combating the Forces of Amon. After Alarak killed Ma'lash and took control of the Tal'darim, the Tal'darim entered into a temporary alliance with the Daelaam to oppose Amon.
After destroying Amon on Aiur, the Golden Armada was freed from his control. The alliance between the Daelaam and Tal'darim ceased, though Alarak chose to give any Tal'darim who wished a single chance to remain on Aiur and join the Daelaam before he and his forces left the planet to go forge their own culture.