As the southern part of the Liaodong Peninsula was ruled by Japan as the Kwantung Leased Territory, leaving Manchukuo with very little coastline, the leadership of the Japanese Kwantung Army regarded the development of a Manchukuo navy to have a very low military priority, although it was politically desirable to create at least a nominal force as a symbol of the legitimacy of the new regime.

Immediately after the Manchurian Incident of 1931, Kuomintang Northeastern Navy Vice-Minister Shen Honglie and Fleet Commander Xian Gongzhe deserted their posts.

The Manchukuo Imperial Navy was established on 15 April 1932, by the proclamation of the "Manchukuoan Armed Forces Act" by Emperor Pu Yi, who also assumed the role of supreme commander.

However, it proved hopelessly inadequate during the Pacification of Manchukuo, and the Japanese instituted numerous training programs in an attempt to raise its capabilities.

As half of its officer class was Japanese, this left a huge gap in capabilities and the performance of the River Force deteriorated rapidly.