It was a development of the FH-1 Phantom, although it was being planned before the Phantom went into production. The basic design was for an enlarged and more powerful Phantom, with new Westinghouse turbojets providing almost twice the power (3,000 lb each against 1,600 lb in the Phantom), an increased fuel load, a move away from the WW II standard 0.50 inch guns to 20 mm cannon, and addition capability to carry bombs, rockets or missiles as well.
A mock-up of the new fighter, designated XF2D-1, was completed in April 1945. The project survived the end of the war but development work was slowed and the first prototype was not built until late 1946. The aircraft made its maiden flight on January 11, 1947 from Lambert field, St. Louis. McDonnell redesignated the aircraft the XF2H-1 and after some problems with the tailplane were resolved an order for 56 craft was placed in May, 1947. The first craft were delivered in August 1948 for service evaluation by Navy pilots, a year later during an aerobatic test a pilot was forced to eject, the first US pilot to use an ejector seat in a real emergency. The F2H-1 was retro-fitted with 3,150 lb thrust engines as they became available.
Despite accepting the F2H-1 it was the more capable F2H-2 that was most widely used, 334 of this type were built. With newer 3,250 lb thrust engines, a reconfigured fuselage gometry and increased wingspan it had less drag and improved performance. It also could be fitted with wing-tip 200 gallon droptanks. It served during the Korean War with the 7th Fleet, initially as a fighter but as newer aircraft were introduced (such as the Grumman F9F and Douglas F3D) it took a photo-reconnaissance role.
The F2H-3 was the last significant alteration. It had an extended fuselgae to increase fuel load by 1,102 gallons. It was also fitted with radar equipment to enable the craft for all-weather missions. The radar was in the longer nose nose, moving the cannon into the fuselage.
Production ended in September 1953 with almost 900 aircraft built. The interest from the RCN to replace the Hawker Sea Fury with the F2H-3 in a 60 aircraft $40 million deal had initially been for new aircraft. Budget problems meant that the RCN eventually acquired second-hand USN aircraft, 39 at a cost of $25 million. The aircraft were delivered from 1955 to 1958 and flew from HMCS Bonaventure or as NORAD interceptors with the AIM-9 Sidewinder missile. The last RCN Banshees retired in September 1962.