A Militia formation, the division undertook garrison duties in New South Wales and then Queensland and did not see combat before being disbanded in late 1943 and early 1944.

Following Japan's entry into the war in December 1941, the Militia was called up for full time service, and the divisional headquarters was established at Richmond.

[1] The 2nd Cavalry Brigade's headquarters moved to Gloucester in February 1942, assuming responsibility for the defence of Stroud and Dungog as well as Coffs Harbour and Armidale.

The following month, the division's support troops also moved to a concentration area west of Newcastle.

[8] The division began moving to Murgon in Queensland in December 1942, after which they were assigned a mobile defensive role, which required further training.

[5] The division's 3rd Motor Brigade was gradually disbanded between March and August 1943 and the 3rd Armoured Division began disbanding at Murgon, in Queensland, on 19 October 1943 as a result of manpower shortages in the Australian Army and the changing strategic situation.