Alcazar was created in 1998 by Andreas Lundstedt, Tess Merkel, and Annikafiore Kjaergaard. Magnus Carlsson joined in 2002.

Their first single, Shine On, was successful in Sweden but it was with their second release, Crying At The Discoteque, that they achieved success across Europe. Both singles appeared on their debut album Casino. In Autumn 2004 Alcazar released the single This Is The World We Live In, followed by the single Physical, the album 'Dancefloor Deluxe' in Sweden, and Here I Am as a Christmas single. 2005 saw the release of the Start The Fire single and their hugely popular Electro-schlager anthem ALCASTAR which was a competitor in that year's Melodifestivalen.

In 2005 the group decided to go seperate ways. It was also revealed that both Magnus and Annikafiore had left the band.

In 2007 Alcazar revealed they are working on new material. The new Alcazar consists of Andreas, Tess and Lina Hedlund. They are currently promoting the new single "We Keep on Rockin'" which already entered the Swedish charts.