Formed at Kelly Field, Texas as the 38th Aero Squadron after the United States' entry into World War I. Not deployed to Europe, remained in the United States, being assigned to Chanute Field, Illinois, duties undetermined. Demobilized and inactivated in December 1918.
Reactivated in 1933 as the 38th Pursuit Squadron, at Selfridge Field in 1933; reassigned to March Field, California in 1936, re-designated as a reconnaissance squadron and was equipped with a mixture of B-18 Bolo medium bombers; observation aircraft and Northrup A-17A attack dive bombers, all used for reconnaissance. Performed reconnaissance and photographic missions in support of flood-relief operations in Southern California, 2–5 March 1938.
38th Reconnaissance Squadron Boeing B-17C Fortress 40-2070 was caught on approach to Hickam Field, Hawaii (Territory) on 7 December 1941 by strafing Japanese Fighters, who left it burned out on the Tarmac. The bomber's flare storage box had been struck by rounds fired by the Japanese fighters as the Fortress approached Hickam. The pilot managed to land the burning B-17, which broke in half upon hitting the runway and came to rest just short of the Hale Makai barracks. All of the crewmen but one survived the landing.
Ordered to Fifth Air Force in the Philippines in November 1941 to reinforce air defenses of the Commonwealth due to rising tensions between the Japanese Empire and the United States. Air echelon departed on 6 November 1941 en route to Philippine Islands, arrived Hickam Field, THawaii Territory, during Japanese attack on Pearl Harbor on 7 December 1941; ground echelon departed San Francisco aboard ship, 6 December 1941, turned around and returned to March Field on 9 December 1941. In Hawaii, the remains of the air echelon flew patrol and search missions in mid-Pacific under direction of the Hawaiian (later Seventh) Air Force, later departing for Australia where the pilots were organized into other squadrons, the B-18s being used for non-combat duties. Ground personnel reassigned to other squadrons at March; the 38th Reconnaissance Squadron becoming a paper unit.
Engaged in long-ranger strategic bombardment operations over Occupied Europe and Nazi Germany, September 1942 – May 1945. The 427th was one of the most highly decorated squadrons in the Eighth Air Force, attacking enemy military and industrial targets as part of the United States' air offensive against Nazi Germany. After the German Capitulation in May, 1945 was reassigned to Air Transport Command. Reassigned to Casablanca, French Morocco, the squadron used its B-17 bombers as transports, ferrying military personnel from locations in France to Morocco, then south to Dakar in French West Africa or to the Azores for further transportation by other units. Inactivated in place in Morocco in late July 1945.
The squadron was activated in 1959 as a result of Strategic Air Command phasing out the B-47 Stratojet, and additional squadrons were activated as part of the consolation of Stratojet wings, and the replacement of the B-47 by B-52 Stratofortresses. In March 1961, President John F. Kennedy directed that the phaseout of the B-47 be accelerated. and the squadron was inactivated on 1 January 1962 as part of the drawdown of the USAF B-47 force, with the aircraft were sent to AMARC storage at Davis-Monthan.