The Air Ministry purchased the farm of Penyberth, of about 250 acres to create Penrhos Airfield, three miles west of Pwllheli, in 1936. The farmhouse was destroyed in order to build a training camp and aerodrome for the RAF.

[The Inventory vol. Caernarvonshire III: West (1964) says on p. 36: The house was 'demolished during the construction of Penrhos aerodrome 1936'. The plan and elevation (fig. 63) were reconstructed 'from photographs and the recollections of former residents'].
On 8 September 1936, the training school building was set on fire as a protest against the destruction of a place of Welsh cultural heritage. Plaid Genedlaethol Cymru members Saunders Lewis, Lewis Valentine, and D.J. Williams claimed responsibility. This delayed the construction of the airfield.

The station opened on 1 February 1937 with 5 Armament Training camp equipped with Westland Walruses and five target towing/air-sea rescue boats working from Pwllheli harbour. Penrhos became the home of 9 Air Observers School (later 9 Bombing and Gunnery School) in September 1939. The unit were equipped with Handley-Page Harrow bombers and Fairey Battle light bombers.

Early in 1940, 12 Fighter Training Squadron used the airfield for training with Avro Tutor, Airspeed Oxford, and Fairey Battle planes. Bombs dropped by a German aircraft destroyed three blocks of officer's quarters, damaging a hangar, and killing two men on 9 July 1940.

The Air Flying Unit ceased to exist on 16 June 1945, but the accommodation was used until 31 March 1946. The site became a demobilisation camp for Polish soldiers and airmen, with up to 100,000 awaiting repatriation. However, when it became clear that many Poles could not return to their homeland, a permanent camp was established in 1949; it is still in use and known as the Polish Home.