86 Squadron was formed at Gawler, South Australia, on 4 March 1943 and was equipped with Curtiss P-40M Kittyhawk fighter aircraft.

The decision to station a fighter squadron at Merauke was made in response to concerns that the Japanese could potentially attack and occupy the strategically located settlement.

A force of 16 Japanese Mitsubishi G4M bombers and the same number of fighters raided Merauke on 9 September and were intercepted by 14 Kittyhawks from No.

While most of the Kittyhawks suffered gun malfunctions and were unable to engage the Japanese, the squadron shot down two G4Ms and a Nakajima Ki-43 fighter without loss.

The squadron regularly conducted patrols of the Merauke area, escorted supply ships and exercised with Australian Army units.

[2] It also undertook several ground attack missions, including an operation on 31 January 1944 in which four Japanese barges were sunk in the mouth of the Lorentz River.

[3] The official history of the RAAF in this period notes that although the two squadrons on Merauke and Horn Island saw little action, they "fulfilled a very useful purpose" by protecting the flank of the Allied forces in New Guinea.

It received more Kittyhawks and undertook training, and in June 1945, began to be re-equipped with North American P-51D Mustang fighters.

The squadron established detachments at Merauke and Thursday Island, but the war ended before it could move forward into the combat zones.