A Militia formation, the division undertook garrison duties in Australia and did not see combat before being disbanded in mid-1943.

[3] The 5th Cavalry Brigade was disbanded during the interwar years, and by the outbreak of the war, the divisional headquarters was located in south Geelong.

Tasked with the defence of the western approaches to Melbourne in the event of an invasion, the division was called up for full time service in December 1941, following Japan's entry into the war.

By this time, there was a manpower shortage, which required a re-allocation of personnel and the gradual reduction of Australia's armoured units.

[7][8] As a result, the 2nd Armoured Division began the process of disbanding on 19 February 1943,[9] although this was not completed until late May / early April when its headquarters was finally closed at Seymour and its staff marched out to join other units.