Arnold AFB began as Camp Forrest, an Army training camp during World War Two. Camp Forrest's training facilities included William Northern Field, used for training Army Air Force pilots. Camp Forrest was declared surplus after the war, and secured by the new Air Force as the site for the Air Engineering Development Center in 1949, and named the Arnold Engineering Development Center in honor of General Henry "Hap" Arnold, one of the founding fathers of the US Air Force, a five-star general and only US officer to hold the rank of General in two military services.

The Arnold Engineering Development Center (AEDC) was created to be the primary jet and rocket development for the Air Force, and developed the premier flight, jet, rocket, and simulation testing in the world. The Jet Age of the 1950s and 1960s, and Space Race kept pushing the AEDC to expand their capabilities. The AEDC was instrumental to the development of the Mercury, Gemini, and Apollo space programs, including testing space capsules, the Saturn V rocket upper stage engines. The main function of the AEDC was to test military aircraft and missiles, and the F-105 Thunderchief, C-141 Starlifter, C-5 Galaxy, E-3 Sentry, AWACs, and the upper stage rocket motors for the Minuteman III ICBM were all tested at Arnold. In the 1970s, systems for the Space Shuttle, F-15 Eagle, F-16 Fighting Falcon, A-10 Thunderbolt, MX missile, Air-Launched Cruise Missile, and Global Positioning Satellite system were tested by the AEDC. Arnold's testing in more recent years has included systems of the Patriot Air Defense Missile, F-117A Nighthawk, and other vital defense systems.

Since the end of the Cold War this facility has been renamed the Arnold Engineering Development Complex, and has continued testing vital aerospace systems.