The company started as a division of the agricultural machine business, Food Machinery Corporation (FMC), when they won a US Federal Government contract to build the Landing Vehicle Tracked (LVT) and became a weapon manufacturer during World War II. Bowen McLaughlin York (BMY), which became the BMY division of Harsco Corporation, soon added aircraft and tanks to its growing munitions capability, further adding to the firm's diversified economic success and defense specialization.

Following a massive decline in orders for tracked combat vehicles between 1983 and 1994 FMC and the Harsco Corporation agreed in January 1994 to combine their defense businesses to form United Defense. The new company owned the former FMC California-based Ground Systems Division and Harsco's Pennsylvania-based BMY Combat Systems Division. The new company restructured its operations to concentrate final assembly and testing to Pennsylvania.

In September 2000, UDI purchased Bofors Weapon Systems AB of Sweden, subsequently renamed Bofors Defence.

In 1997 UDI was subject to a takeover bids by rival General Dynamics and The Carlyle Group. It chose the lowest bid from private equity firm The Carlyle Group, which floated the company in 2001 but retained a share of the company.