No. 101 Squadron RAF was originally formed within the RFC as a bomber unit in July 1917. It was disbanded in December 1919, then re-formed at Bircham Newton, Norfolk, in 1928, being the only operational squadron to fly the Boulton Paul Sidestrand and Overstrand aircraft. These were the first RAF bombers to have enclosed and power-operated turrets. When WWII broke out, the squadron was based at West Raynham, Norfolk, having now equipped with Bristol Blenheim aircraft. It was a reserve squadron until its first operation against Germany in July, 1940, and it later spent the greater part of its attacks on the barges in the channel and North Sea ports, which had been gathered for operation SEALION, the projected German invasion of Britain. In April 1941, a flight of the squadron's Blenheims was detached to Manston in Fighter Command's No. 11 Group, and from there it attacked enemy shipping during daylight, in an operation known as Channel Stop. In June, 1940 the squadron moved to Oakington, Cambridgeshire, where it remained until February 1942, when it moved to Bourne, Cambridgeshire.

During May and June 1941, the squadron converted to Vickers Wellingtons and flew with Bomber Command. It participated in all three 1000-bomber raids to Cologne, Essen and Bremen in 1942. In August 1942 the squadron moved to Stradishall, Suffolk, and in September to Holme-on-Spalding Moor, Yorkshire. Later in the year the squadron converted to Avro Lancaster aircraft, and continued the Bomber Command assault on Germany and Italy. In June 1943 the squadron moved again, to Ludford Magna, Lincolnshire. It participated in the raid on the rocket development centre at Peenemunde, and was fortunate enough to evade the enemy night fighters on that occasion.

In late 1943 the squadron was given a new function within Bomber Command, that of Radio Counter Measures, to attempt to cut the radio communications between the German night fighter controllers and the fighter pilots. Each aircraft was equipped with the radio device known as A.B.C. or Airborne Cigar. A special German-speaking radio operator in the aircraft used the ABC equipment to scan the appropriate frequencies, and when the German signals were detected, jamming was started by transmitting a warbling note. The Lancaster aircraft carrying ABC were easily distinguished because they carried three large aerials, two dorsally and one under the nose. In addition to the ABC equipment, the Lancasters carried a full bomb load. Unfortunately, because they transmitted strong signals, it was possible for night fighters to seek them out, and squadron losses were relatively high as a consequence; only three other Lancaster squadrons had higher losses. On the night of 5/6 June 1944, the squadron put up 21 ABC Lancasters to jam enemy wireless communications to prevent night fighters from being directed to the airborne invasion forces.

After its last operational mission, to Berchtesgaden in late April 1945, the squadron participated in operation MANNA, dropping food to help the staving populace of the Netherlands. It also was part of operation DODGE, bringing back British troops from Italy. The squadron moved to Binbrook, Lincolnshire in October 1945. It was successively equipped with Avro Lincoln, English Electric Canberra and Avro Vulcan aircraft.