It served as a fighter squadron in the Second World War, taking part in the British invasion of Madagascar in 1942, in the Allied invasions of Northern France and Southern France in 1944, also taking part in operations in the Aegean Sea and off Norway before disbanding in October 1945.

In March 1942, its strength now increased to nine aircraft, the squadron first embarked aboard Illustrious as the carrier set out for the Indian Ocean.

[6][11] On 3 April 1944, 881 Squadron took part in Operation Tungsten, a carrier strike against the German battleship Tirpitz at Kaafjord in the far north of Norway.

[16] In July, the squadron re-embarked on Pursuer which departed for the Mediterranean, taking part in Operation Dragoon, the Allied invasion of Southern France, in August 1944.

The squadron's Wildcats were used for reconnaissance and artillery spotting, as well as for dive bombing and combat air patrol duties during the invasion.

[11] In September that year, Pursuer took part in Operation Outing, an offensive by the Royal Navy against German forces in the Aegean Sea.

where it replaced its Wildcats with Grumman Hellcat fighters in preparation for joining the British Pacific Fleet.

[14][21] The squadron re-equipped with Grumman CS2F-1 Trackers in February–March 1957, starting operations on Canada's new carrier, Bonaventure, later that year.