The team was founded as the Anaheim Amigos, a charter member of the ABA based in Anaheim, California. They played at the Anaheim Convention Center. The team's colors were orange and black. The Anaheim Amigos were founded by Art Kim, a Hawaii native who had long been active in basketball as a player, Amateur Athletic Union administrator and owner. The Amigos lost the very first ABA game to Oakland, 132-129. They finished their first season with 25 wins and 53 losses, good for fifth place in the Western Division but not good enough to make the playoffs.
The Amigos lost $500,000 in their first season, largely due to poor attendance; they only averaged 1,500 fans per game in a 7,500-seat arena. Kim realized he did not have the resources to keep going and sold the team to construction company owner Jim Kirst, who moved the team as the Los Angeles Stars in 1968 and played at the Los Angeles Memorial Sports Arena in Los Angeles, The franchise made an attempt to sign legendary center Wilt Chamberlain. Chamberlain did not sign with the Stars (though he did later coach the ABA's San Diego Conquistadors). With 33 wins and 45 losses, the Stars improved from their first season but again finished fifth in the Western Division and did not make the playoffs.
In October 1969 the Stars signed Zelmo Beaty away from the NBA's Atlanta Hawks, but Beaty had to sit out the season due to a one-year option held by the Hawks, which the Stars would not buy out for $75,000. First year players Mack Calvin and Willie Wise signed with the Stars. The Stars finished fourth in the Western Division with a record of 43-41, earning the first winning season in franchise history and a playoff berth. The Stars defeated the Dallas Chaparrals 4 games to 2 in the Western Division semifinals and bested the Denver Rockets 4 games to 1 in the semifinals before losing the ABA championship series 4 games to 2 to the Indiana Pacers. Kirst had not anticipated the fast turnaround, and did not book the Sports Arena for several dates. They had to play several first and second-round games in their old home in Anaheim, as well as at the Long Beach Sports Arena in Long Beach. This turned out to be their final game as the Los Angeles Stars.