Alliance Municipal Airport was built during World War II by the United States Army Air Forces (USAAF) as one of eleven USAAF training airfields in Nebraska during World War II. On April 14, 1942, the secretary of war authorized the establishment of the field. It was built between summer 1942 and August 1943. The 4,205-acre (17.02 km2) site is bordered by low rolling sandhills to the east, and a wide plain on the north, west and south. Snake Creek flows through the southern section of the property.

During construction over 5,000 workers came from all over the country, causing a housing shortage. The population of Alliance doubled almost overnight. Workers moved into garages, store rooms, cellars, attics, and even their own trailers in established parks. Many of the workers were Sioux Indians from the Pine Ridge and Rosebud Reservations, Mexicans from the Southwest, and African Americans from Wichita and Kansas City.

The cantonment housing area of the airfield covered 1,088 acres (4.40 km2), and had 775 buildings and other structures, including hangars, chapels, warehouses, barracks, mess halls, service buildings, and latrines. Some were brick and steel, such as aircraft hangars, but most were frame construction on concrete foundations. Tar paper and plywood were generally used for walls and flooring, as the buildings were considered temporary, to be used for a few years. The airfield had a railroad spur, power plant, waterworks, sewage system and 35,503 feet (10,821 m) of runways. The airfield had been planned as a training facility for paratroops and air commandos, which needed long runways for C-47 Skytrains to tow gliders.

On August 22, 1943, a huge crowd of 65,000 people gathered for the dedication of Alliance Army Airfield, a training facility for Army paratroops and air crews. Between the opening of the airfield and spring 1944, the I Troop Carrier Command, 434th Troop Carrier Group commanded the airfield. The 411th Army Air Force Base Unit commanded the support elements at Alliance as part of Air Technical Service Command. In addition to the C-47s, the unit repaired B-17 Flying Fortress and B-24 Liberator aircraft from other airfields.

Alliance AAF was divided into air operations, quartermaster, troop cantonment, and gunnery ranges. The airfield was home to as many as 14,000 paratroops in the area, using C-47 Skytrains as powered troop carriers, and CG-3/CG-4 Waco glider troop carriers for their training aircraft. The sandhills were thought to provide a softer landing than wooded areas for jumping paratroops. Known units that trained at Alliance AAF were:

403d Troop Carrier Group (December 18, 1942 - May 3, 1943)

The group eventually moved to the South Pacific as part of Thirteenth Air Force.

434th Troop Carrier Group (9 February 1943 - 5 September)

The group eventually moved to England as part of Ninth Air Force.

436th Troop Carrier Group (May 2 - August 1, 1943)

The group eventually moved to England as part of Ninth Air Force.

439th Troop Carrier Group (June 1 - December 16, 1943)

The group eventually moved to England as part of Ninth Air Force.

440th Troop Carrier Group (September 7, 1943 - January 4, 1944)

The group eventually moved to England as part of Ninth Air Force.

442d Troop Carrier Group (December 1943 - January 1944)

The group eventually moved to England as part of Ninth Air Force.

349th Troop Carrier Group (January 19 - March 8, 1944)

The group eventually moved to England as part of Ninth Air Force.

443d Troop Carrier Group (January 19 - February 15, 1944)

The group eventually moved to the China-Burma-India Theater.

10th Troop Carrier Group (March 8 - April 14, 1944)

The group trained cadres for troop carrier groups and trained replacement crews. It was inactivated in place.

In addition to the USAAF units, the Army 326th Glider Infantry, 507th Parachute Infantry, and 878th Airborne Engineers trained at Alliance before deployment to the European Theater.

As paratroopers flooded into Alliance, housing was short. A federal housing project was built at the east end of Alliance, apartment complexes with plain stucco walls, coal heating stoves, and rows of chimneys along the rooflines, thus the name "Chimney Town."

After the paratroops left Alliance, Second Air Force temporarily used the Alliance airfield in the fall of 1944 for the training of B-29 Superfortress crews. Training included teaching the B-29 air crews how to drop bombs and read navigational, aeronautical and bombsight equipment.

Finally, in the summer of 1945, the 1st Troop Carrier Command returned to the airfield to train for the proposed invasion of Japan. That necessity ended when Japan surrendered on September 6. On October 31, 1945, the Army Air Force "temporarily" deactivated the Alliance Army Airfield. Control of the airfield was assigned to Air Technical Service Command at Ogden Army Airbase, Utah.

Though speculation was that the Army would make the huge Alliance airfield a permanent installation, by November 20 the Troop Carrier Command closed the facility permanently and began to make plans to sell the surplus property.

By December 1945 the facility was declared surplus property.