2 Squadron was formed in 1955 to provide transport for the newly formed Royal Ceylon Air Force with Airspeed Oxfords, de Havilland Doves, Westland Dragonfly helicopters and later Scottish Aviation Pioneers.

With the escalation of the Sri Lankan Civil War, air operations intensified.

201 squadron came to operate the larger transport aircraft Hawker Siddeley HS 748s and the newly acquired Antonov An-32s.

8 Light Transport Squadron and operated the lighter aircraft of the air force.

Throughout the civil war, since the early 1990s the squadron played a major role in maintaining the air passage to Jaffna till 2009, when the land route was opened.