On December 27, 1933, the St. Augustine City Commission voted to buy 276 acres (1.12 km2) in Araquay Park, north of the city, for $8,000 for conversion to a public airport. U.S. Government grants through the decade allowed improvements to the airfield, and after the outbreak of World War II in 1939 vast new sums were provided for possible military use.

After the December 7, 1941, attack on Pearl Harbor, civil aviation at the airfield was cancelled and the U.S. Navy took over the airport, renaming it Naval Auxiliary Air Station St. Augustine. Used as a satellite gunnery base in connection with training operations at nearby Naval Air Station Jacksonville, improvements were made to NAAS St. Augustine included additional runway and hangar construction, support facilities and a control tower. After the war, the Navy reduced operations, and in May 1946 the airport was returned to the city.

In the postwar period, government subsidies made possible the establishment of "feeder airlines" providing air service to smaller cities, with St. Augustine Airport becoming a scheduled stop for two passenger airlines. With cutbacks in subsidies the feeder airlines went out of business, and by 1950 the airport, with weeds growing through the cracks in the runway, was seen as a "white elephant" the city could ill afford to operate. It closed and was leased to the local Moose Lodge for $1.00 a year. Soon the white elephant became a bonanza - a major factor in the industrial development of St. Augustine and St. Johns County.

In June 1954, the Fairchild Engine and Airplane Corporation announced it would build an aircraft modification plant at the airport, opening the facility the following year. Soon military aircraft such as USAF C-119 and USMC R4Q Flying Boxcars and USAF and USCG C-123 Providers were arriving at Fairchild's St. Augustine facility. During the 1960s, C-119s would be modified as AC-119 gunships and C-123s into aerial spraying aircraft for U.S. Air Force units in Vietnam. Facilities expanded several times to meet Fairchild's requirements – the lengthening of Runway 13/31 to nearly 8,000 feet (2,400 m) for military jets was a direct result of such needs. Fairchild also operated a non-federal air traffic control tower in the former Navy control tower on a periodic basis.

In 1966, a terminal building and additional hangars were built, while fixed-base operations (FBO) were established and additional land acquired. In 1967, Ernie Moser incorporated Aero Sport as the airport's FBO and operated it along with his wife, Mary Alice, and son Jim. Ernie gained notoriety by landing a Piper Cub on the "World's Shortest Runway" a wooden platform on top of a Chevrolet van. His son Jim also became known for his flying of his prized aircraft, a Bücker Bü 133 Jungmeister. In January 2006, Diane Moser, the late Jim Moser's wife, sold the business to the Galaxy Aviation chain of FBOs, bringing to an end the Moser era.

In 1976, Fairchild Industries announced that it would close down its St. Augustine operations. An industrial park was later created at the Fairchild facilities, and in 1980 the industrial park was sold to the then-Grumman Corporation (now known as Northrop Grumman) for an aircraft modification plant that would ultimately service numerous front-line U.S. Navy and U.S. Marine Corps aircraft, to include the A-6 Intruder, EA-6B Prowler, C-1 Trader, C-2 Greyhound, E-2 Hawkeye and F-14 Tomcat. Grumman assumed responsibility for operating the air traffic control tower as required, maintaining emergency runway arresting gear systems for naval aircraft, and providing aircraft rescue and fire fighting capability (ARFF) for the airport. The Naval Air Systems Command also established Naval Plant Representative Office (NAVPRO) St. Augustine on site.

In 1986, in accordance with the Federal Aviation Regulations (FAR), the airport was awarded an FAR Part 139 operating certification by the Federal Aviation Administration (FAA), enabling the airport to operate scheduled and charter airline aircraft carrying more than 35 passengers. This certification process increased airport safety and made the airport eligible for federal grant money under the FAA's Airport Improvement Program (AIP). The airport was designated a "reliever airport" for general aviation overflow from Jacksonville International Airport.

In the mid-1980s, Grumman St. Augustine was tasked with a major military contract for "re-winging" nearly all A-6 Intruder carrier-based medium attack bombers for the U.S. Navy and U.S. Marine Corps. In 1989, Grumman undertook large construction projects at the airport, to include construction of their "North 40" facility in support of a Federal Express Boeing 727 modification contract. Grumman, along with the Airport Authority, also built a facility to house the U.S. Coast Guard's E-2C Hawkeyes, which was named Coast Guard Air Station St. Augustine. At this point, the airport technically became a joint civil-military facility, while CGAS St. Augustine operated for two years with E-2C aircraft on loan from the Navy, patrolling along the eastern U.S.