The Ontailians established a stable society in the 15th century, and over the next nine hundred years they developed little beyond small technological advances. In the 1870s, the Ontailians developed space travel and they began to chart the local space around them. In around 1878, they encountered the "demon flyer", a shape-shifting vessel from another dimension. The Ontailians began to appease the vessel and other the next 500 years the Ontailians and the "demon flyer" formed a special relationship.
The Ontailians first encountered representatives from the United Federation of Planets in the early 2360s, but the Ontailians expressed little-or-no interest in learning about Federation cultures, and expressed no desire to become Federation members. This changed in 2374, when Ontail was one of the planets that stood in the way of Dominion forces in the Dominion War against the Federation. Not wanting to be destroyed by the Dominion they were fast tracked to Federation membership, but still showed no interest in learning about other cultures. When Starfleet and Dominion forces were fighting the nearby Battle of Rashanar, the Ontailians lent little aid to the battle, even when all of the ships were destroyed.
In 2377, the Federation began clearing the Rashanar Battle Site and assigned the USS Juno to collect the bodies of the fallen. The Ontailians lent a large force to help with the clearing of the site and to keep looters and scavengers at bay. In 2378, the Ontailians attacked and destroyed the Juno after the USS Enterprise-E destroyed the Ontailian flagship, Vuxhal, which they believed was a duplicate created by a Dominion weapon.
It was later revealed that the Ontailian claim that the Enterprise destroyed the real Vuxhal was false, and that they were keeping the secret of the "demon flyer" from their Federation allies. To prevent the truth from coming out, Captain Jean-Luc Picard of the Enterprise agreed to live with the disgrace of his supposed actions, to allow the Ontailians to remain in the Federation. (TNG novels: A Time to Be Born, A Time to Die)