From its formation in 1916 as part of the Australian Flying Corps, it has flown a variety of aircraft types including fighters, bombers, and Airborne Early Warning & Control (AEW&C).

[2] Between February and September 1917, the squadron undertook training with Royal Flying Corps units before being equipped with Airco DH.5 fighters.

[1] In late September 1917, the squadron flew its aircraft across the English Channel, landing in St Omer without incident or loss – and after overnighting there it moved to Baizieux.

[2] On 22 November, the squadron shot down its first German aircraft in air-to-air combat during a chance encounter on a ground attack sortie.

[1] During early 1918, the Germans launched a major offensive on the Western Front after the collapse of Russia allowed them to increase their forces in the west.

[5] Falling initially against the British southern flank, the offensive pushed the Allies back significantly, and the squadron was forced to withdraw to airfields further back from the front as German forces advanced steadily: on 2 April it moved from Savy to Bertangles, on 4 April to La Bellevue and then on 4 June to Fouquerolles, remaining there until 21 June when it moved to Liettres to support the French during the Marne offensive.

[4] Despite the moves, the squadron maintained a high operational tempo, becoming involved in heavy air-to-air combat during fighter sweeps, and also being used to attack advancing German ground forces (see image left).

2 Squadron produced 18 flying aces,[6] including Francis Ryan Smith, Roy Cecil Phillipps (the squadron's highest scorer),[6] Roby Lewis Manuel, Henry Garnet Forrest, Adrian Cole, Eric Douglas Cummings, Richard Watson Howard, Frank Alberry, Ernest Edgar Davies, and James Wellwood.

2 Squadron was briefly re-formed as part of the newly independent Royal Australian Air Force at Point Cook, Victoria, but it never progressed beyond a cadre unit and was disbanded a few months later.

[9][7] Wing Commander Frank Headlam took over command of the squadron in April 1941,[10] and in early December 1941, shortly before Japan's entry into the war, the squadron moved to Darwin, Northern Territory where it maintained its maritime role and deployed detachments to the islands to Australia's north, including Ambon in the Dutch East Indies.

[11] The squadron continued operations after its return to Australia, maintaining an intense bombing campaign against Japanese shipping and installations on islands including Timor and Ambon from May to October during which 13 crews were killed.

[7][12] Throughout 1942–1943, the squadron continued operations with its Hudsons against the Japanese in the East Indies and conducted aerial resupply for elements of Sparrow Force that were fighting on Timor.

The squadron operated the type only briefly, alongside a small number of remaining Hudsons before converting to the North American B-25 Mitchell in May.

[9] After being withdrawn from operations briefly, it recommenced combat missions in late June,[12] focusing on anti-shipping strikes, but also attacking Japanese airfields.

2 Squadron moved to Balikpapan in Borneo where it was used to drop supplies to Allied troops in Japanese prisoner-of-war camps before undertaking transportation duties following the end of hostilities.

[14] In 1953, the squadron was re-equipped with GAF Canberras, which it later operated from RAAF Butterworth during the Malayan Emergency, after deploying there in 1958 to relieve the Lincoln-equipped No.

[20] An aircraft from the squadron responded to a distress call on 24 April 1969 and, against operational orders, bombed a site in Cambodia (the Fishhook) where US special forces were pinned down.

[18] It briefly returned to bombing role in training, but in the later years of the Canberra bomber's RAAF operations, it was predominately used for target towing in support of the RAAF's fleet of Dassault Mirage III fighters and survey photography to support the aerial mapping of Australia and other locations including Papua New Guinea, Irian Jaya and the Cocos and Christmas Islands.

[26][27] On 14 September 2014, the Federal government committed to deploying one of the squadron's Boeing 737s to Al Minhad Air Base in the United Arab Emirates, as part of a coalition to combat Islamic State forces in Iraq.