In response to a United States Army Air Service Pursuit Alert (Special) requirement for an interceptor aircraft, Dayton-Wright Airplane Company designed an aircraft with the Army designation PS-1.

Using many of the same advanced features of the earlier Dayton-Wright RB-1 Racer developed for the 1920 Gordon Bennett race.

The XPS-1 differed from its predecessor in having a parasol monoplane configuration with wooden flying surfaces whose fuselage was a fabric-covered steel-tube structure.

The main design feature retained from the RB Racer was its retractable undercarriage.

Test flights began in 1923 but the performance was so poor the United States Army Air Service refused to accept the design.