Throughout the course of Royal Navy's history there had been different squadrons stationed in home waters. One of the earliest known naval formations to be based at Plymouth was called the Western Squadron which was the forerunner of the Channel Squadron that was later known as the Channel Fleet. In 1650 Captain William Penn, Commander-in-Chief, was charged with guarding the Channel from Beachy Head to Lands End with six ships. This system continued following the Restoration. It was the start of what was to become a Western Squadron. In 1690 the squadron operated out of Plymouth Dockyard during wartime periods which was for most of the 18th century and early 19th century. In 1858 The Channel Squadron and sometimes known as the Particular Service Squadron was established.
During the 19th century, as the French developed Cherbourg as a base for steam-powered ships, the Royal Navy developed Portland Harbour as a base for the fleet. The harbour was built between 1849 and 1872 when the Royal Navy created a breakwater made of blocks from local quarries on the Isle of Portland. The Channel Squadron only became a permanent formation in 1858.
With the amelioration of Anglo-French relations, and the rise of German militarism towards 1900, the need for a Channel Formation diminished and the main European naval arena shifted to the North Sea. Admiral Sir Arthur Wilson was officially "Senior Officer in Command of the Channel Squadron" from 1901 to 1903. His subordinate flag officer in that squadron was the Second-in-Command, who commanded a division of battleships. For the period 1858 to 1903 the Channel squadron was often incorrectly referred to as the Channel Fleet.
On 17 April 1903 The Right Hon. Lord Charles Beresford was appointed Vice-Admiral Commanding, Channel Squadron. On 6 May 1903 Admiral Beresford was informed by the Admiralty "that for the future the Channel Squadron shall be known as the Channel Fleet." On 14 December 1904 the Channel Fleet was re-styled the 'Atlantic Fleet' and the Home Fleet became the 'Channel Fleet'.
On 24 March 1909, under a fleet re-organisation, the Channel Fleet became the 2nd Division of the Home Fleet.