During World War II, it provided local air defence for the Perth region, before undertaking Army co-operation duties in 1943–1944 and then converting to a heavy bomber role in 1945.

Following the declaration of World War II, the squadron was allocated Australian-built, 2 seater Wirraways, operating these in convoy protection and anti-submarine roles off the Western Australia coast around Fremantle and Rottnest Island.

[2] Squadron aircraft participated in the protection of convoys transporting the 2nd AIF to the Middle East and in the unsuccessful search for survivors from HMAS Sydney, the RAN cruiser sunk on 19 November 1941 by the German raider Kormoran off Western Australia's mid-west coast.

[6] After Japan entered the war, the squadron's Wirraways were complemented in 1942 by Brewster Buffaloes originally intended for the NEI Air Force.

Operations against these targets began 2 months later with the squadron's Liberators usually staging through Corunna Downs and Truscott airfields in north-Western Australia.

[11][12] During these operations one Liberator (A72-133) was lost on a 26/27 April 1945 night strike when it was forced to land in shallow water off a Japanese held island in the Lesser Sunda group.

[18][19][20] The aircraft was tasked to participate in the squadron's successful search for survivors from the SS Peter Silvester after it was torpedoed 1300 kilometres off the WA coast on 6 February 1945 by the German submarine U-862.

The squadron's search flights of up to 19 hours duration were instrumental in the rescue of 100 of the 174 aboard the last Allied ship lost to enemy action in the Indian Ocean.

Between 1948 and 1960, the squadron trained reservist pilots and ground crew and operated Australian-built or assembled P-51 Mustangs and de Havilland Vampires, along with Tiger Moth and Wirraway trainers.

In 1989, with a substantially increased number of PAF personnel and equipped with the 2-seat Aermacchi MB-326 aircraft, the squadron resumed flying operations in the roles of initial jet training at RAAF Pearce and providing fleet support for the Royal Australian Navy.

25 Squadron returned to its role of providing a reserve pool of trained personnel to PAF units as part of 96 Wing in the Combat Support Group.

Mounted on a wooden pike surmounted by a Golden Eagle the Standard is a fringed and tasselled Air Force blue silken banner with a decorative border of roses, thistles, shamrocks, leeks and wattle.

A white scroll inscribed with the squadron's World War II Battle Honour Eastern Waters 1941–1945 is shown to the left of the No.

25 (City of Perth) Squadron was awarded the 2014 Hawker Siddeley trophy as "the most proficient RAAF unit with primary whole of base support functions".