Development work began in 1949, the aircraft was designed around only a single Westinghouse J-40 engine, which was to have over 11,000 lb of thrust - three times that of the engines in the Banshee. It was the first swept-wing design produced by McDonnell and among the first US aircraft to have missile armament.
The prototype first flew in 1951 and first test flights of the operational design were in January 1953. The engine was a major disappointment, producing only half of the expected power it was tempermental and unreliable, of 35 F3H-1 aircraft that were flown with the J-40 engine eight were involved in major accidents.
The J-40 engined aircraft were grounded and a new engine was sought, the best alternative was destined for the F-100 Super Sabre and subsequent F3Hs were fitted with the Allison J-71 engine (also used in the B-66/A3D) and designated the F3H-2. While more reliable this new engine had to be 'shoe-horned' into the airframe and with less power than needed did little for the aircraft's performance. The first Demon with a J-71 flew in October 1954. Another problem was with the ejector seats, initial versions could fail to operate and had to be replaced with Martin Baker models.
Despite the problems in 1956 the Navy ordered 239 F3H-2s and the first were deployed in March 1956. 522 Demons were built up to the end of production in November 1959. It was the Navy's first all-weather interceptor with radar and the Raytheon Sparrow or Sidewinder AAM and remained the Navy's front-line fighter until 1962 when it was succeeded by the F-4 Phantom II. Although developed during the Korean War it did not see action, although it flew over Lebanon and Quemoy in 1958.