The airport was built up from an old airstrip that was first laid down in the 1920s, not long after the National Capital site was decided. In 1939 it was taken over by the RAAF, with an area leased out for civil aviation.
On 13 August 1940, in what became known for the Canberra air disaster, a RAAF Lockheed Hudson flying from Melbourne crashed into a small hill to the east of the airport. Four crew and six passengers, including the Chief of the General staff and three Federal Government ministers, were killed in the accident. James Fairbairn, Minister for Air and Civil Aviation, was one of those killed and Fairbairn Airbase, the eastern component of the airport, was subsequently named after him. In 1962 the military side of the airport was renamed RAAF Base Fairbairn. The North-East quadrant of the airport still retains the Fairbairn name.