In 1936, the Canadian government decided to reorganize the Royal Canadian Air Force (RCAF) as a purely military force. The federal government created the Department of Transport to take responsibility for civil air transport matters that had previously been the purview of the air force. The RCAF was authorized to create three military squadrons: the Number 2 Army Cooperation Squadron, Number 6 Torpedo Squadron, and the Number 3 Bomber Squadron.
In May 1937, the fighter escorts were transferred from the Number 3 Bomber Squadron to create the Number 1 Fighter Squadron.
