The success of the GE27/GLC38 gas generator development of the 1980s led to the formation of the CFE Company by GE and the Garrett Engine Division of Allied Signal (now Honeywell) in 1987.

The CFE738 is a two-shaft design, consisting of a single stage bypass fan connected via one shaft to a 3-stage low-pressure (LP) turbine at the rear of the engine; with a six-stage combination low-pressure/high-pressure (LP/HP) axial/centrifugal compressor (five axial stages and one centrifugal stage) driven by a two-stage HP turbine, between the fan and the LP turbine, on the other shaft.

A mixer is built in to the jetpipe to mix cold bypass air with the hot exhaust gases.

Chosen to power the Falcon 2000 in 1990, the engine was also first run in May 1990,[1] and it was first flown on a Boeing 727 testbed on 31 August 1992.

It was certified by the United States Federal Aviation Administration (FAA) on December 17, 1993,[1] and it entered service in 1994.