The squadron is based at HMAS Albatross in Nowra and primarily operates from the Navy's Adelaide and Anzac class frigates.

The squadron formed part of the 20th Carrier Air Group embarked on HMAS Sydney.

In 1952, 816 Squadron participated in the Montebello Islands atomic weapons tests and in 1953 saw service in the Korean War.

In 1956 with the arrival of HMAS Melbourne, 816 Squadron embarked as part of the 21st Carrier Air Group equipped with Gannet and Sea Venom aircraft.

On 5 December 1976, a fire was deliberately lit by a Fleet Air Arm member near the aircraft hangars at HMAS Albatross.