Established in 2164, Proxima III became one of the Earth Alliance's leading industrial producers with many human interstellar corporations placing their main offices in the Proxima colony, particularly those that operate orbital construction facilities. Proxima III's relatively empty orbital trajectories was the main draw for this kind of business early on, a move that proved profitable for several companies. It had its own transfer station which dealt with customs, security and cargo for the planet. The planet has its own jump gate at one of its Lagrange points for interstellar travel for its citizens and visitors.
In 2260 the planet broke away from the Earth Alliance in protest of the bombing of civilian targets on Mars. It, along with Orion VII and space station Babylon 5, set itself up as an independent state until President Morgan Clark was removed from office.
By September of 2261 the colony had been invaded by Earth Alliance. First, a Starfury fleet had been sent to raid the colony, however, the fleet defected to the Earth Alliance Resistance instead, in support of the colony, but would later be destroyed by Clark-loyal forces. The EAS Pollux then arrived and destroyed civilian transports, killing 10,000 people. Destroyers then blockaded the jump gate to prevent civilians escaping.
The colony was close to surrendering as food, water and medical supplies were all running dry, and that Clark-loyal troops had been sent to the ground and fought the rebels on till near exhaustion of ammo and man-power, until Sheridan and a detachment of White Stars broke the blockade and forced the surviving combatants to surrender during the Battle of Proxima III. It later rejoined Earth Alliance after Clarks regime ended.